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European asset owners drive growth in smart beta strategy use

More than half of institutional investors around the world now use smart beta strategies within their portfolios, according to a survey by FTSE Russell.

In its sixth annual global institutional asset owner smart beta survey, FTSE Russell found that 58% of institutional investors implemented smart beta strategies, up by 10% from 2018.

The group’s report showed European asset owners had the highest rate of smart beta adoption, with 65% of respondents in Europe already having an allocation to smart beta.

This compared with 60% of North American asset owners – up 18% compared to 2018, FTSE Russell said.

Rolf Agather, managing director for research and innovation at FTSE Russell, said: “Risk reduction, return enhancement and improved diversification continue to drive smart beta adoption among institutional investors globally.

“Within smart beta, multi-factor index-based strategies have undoubtedly been the market’s favoured choice, with uptake more than tripling since 2015.”

FTSE Russell expected to see lasting growth in smart beta, particularly for multi-factor combination strategies, Agather added.

Among smart-beta users, the proportion using multi-factor index strategies – the most popular approach – rose to 71% in 2019, from 49% in 2018.

The survey also showed a big rise in the number of asset owners interested in applying environmental, social and governance considerations into smart beta allocation, with this proportion rising to 77% in 2019, from 22% the year before.

Overall, the survey showed that 78% of asset owners have either implemented, are evaluating, or plan to evaluate a smart beta index-based strategy.

The 2019 survey was conducted in January and February, with 178 global asset owners taking part: 46% were based in North America, 29% in Europe and 19% in the Asia Pacific region. Unions or industry-wide pension schemes made up 15% of participants.

IPE research shows top factor investing managers

IPE’s Top 400 Asset Managers survey polled providers on their assets under management in factor investing or smart beta strategies. APG, the giant Dutch asset manager, reported that all of its €462.6bn of assets was run according to various factor strategies.

IPE Top 400 Asset Managers
CompanyEuropean institutional
factor investing assets
APG Asset Management€462.6bn
Baillie Gifford & Co.€54.3bn
Robeco€42.8bn
Legal & General Investment Management€28.2bn
BlackRock€28bn
Insight Investment€27.2bn
Quoniam Asset Management€22.6bn
UBS Asset Management€18.1bn
Swisscanto Invest€11.7bn
Vontobel Asset Management€11.2bn

Source: IPE Top 400 Asset Managers survey

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