Investors want smart beta ETFs: study

Investors’ appetite for smart beta ETFs is growing, requiring greater investor information and education, reveals an EDHEC-Risk Institute survey of 180 European ETF investors. The survey results are part of a study entitled “Investor Perceptions about Smart Beta ETFs.”

Read: How smart has your beta been lately?

The study’s key findings:

• Among ETF users, there’s a high global rate of satisfaction (86%) toward smart beta. Smart beta indexes avoid stock or sector concentration (say 81% of respondents), and diversification across several weighting methodologies allows a reduction of risk and adds value (say 79% of respondents).
• Capturing factor premia is the prime motivation for 87% of respondents when investing in smart beta ETFs. Value, low volatility and size factors are considered as the most likely to be rewarded.

Read: Seeking lower risk? Try twice the diversification

• A gap exists between information required by investors on smart beta strategies and information offered by providers. Further, 94% of respondents (compared to 88% last year) agree that smart beta indexes require full transparency on methodology and risk analytics.

Read: Canadian ETFs surpass $100B in AUM

• Education is needed to properly assess smart beta strategies. Despite the growing interest for smart beta products, investors allocate fewer resources to understanding smart beta, when compared to active managers or cap-weighted indexes.

Find the full study here.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.