According to FTSE Russell’s third annual global institutional market survey, the percentage of asset owners currently evaluating smart beta has doubled from 15 per cent at the first survey in 2014 to 36 per cent in 2016, and 62 per cent of asset owners with an existing smart beta allocation are now evaluating additional allocations.
Smart Beta: 2016 Global Survey Findings from Asset Owners reveals that the strongest growth in smart beta adoption is among asset owners with less than USD1 billion in assets.
FTSE Russell believes that in addition to marking a turning point in smart beta evaluation for global asset owners, results from this year’s survey demonstrate developing trends in asset owners’ views and usage of smart beta. The percentage of asset owners using five or more smart beta indexes increased significantly, from two percent in 2014 to 21 per cent in 2016. While low-volatility and value factor indexes still lead in asset owner implementation, adoption of multi-factor combination indexes has nearly doubled in the last year and is now a close third. And close to 70 per cent of asset owners take a long view on smart beta, planning to use smart beta indexes five years or longer to help achieve investment objectives.
Rolf Agather, managing director of North America research, FTSE Russell, says: “The survey demonstrates accelerating interest in and implementation of smart beta indexes among global institutional asset owners. While many asset owners and consultants have increased their understanding of smart beta, continuing innovations in other asset classes and the multi-factor arena underscore the need for more information and education. We hope the results of the survey provide a degree of insight for all market participants with an interest in smart beta.”
The third annual survey was conducted in January and February 2016. The 253 asset owners included this year (up from 214 last year and 181 in 2014) are drawn from North America (49 per cent), Europe (33 per cent) and Asia (13 per cent). The global research team at FTSE Russell, a pioneer in smart beta through predecessors FTSE Group and Russell Indexes, engaged a mix of organisations including corporations, government entities, union or industry-wide pension schemes and non-profits to gather these findings. Total assets under management for survey participants is estimated at over USD2 trillion globally.
