Assets replicating Scientific Beta's multi-factor indices continue to rise


Assets replicating Scientific Beta's multi-factor indices continue to rise

Assets under replication reach USD 48bn at June 30, 2019

Scientific Beta has announced that assets tracking its smart beta indices reached USD 48bn at June 30, 2019. Compared to June 30, 2018, this amount of assets under replication represents an increase of USD 14bn, corresponding to year-on-year growth of over 40%.

Noël Amenc, CEO of Scientific Beta, said, "In a challenging market environment for factor strategies, we have been very heartened by the continued growth of Scientific Beta's assets under replication. We think that our success is based on transparency on explicit and implicit risks and the capacity to manage these risks using the risk-control options that are offered for all of our flagship multi-beta multi-strategy indices."

Scientific Beta's indices are based on an investment philosophy that is motivated by a search for robustness at all stages of the index design process and is guided by the following three key principles:

  • Offering exposure to long-term well-rewarded risk factors, the existence and persistence of which have been documented by empirical studies and economic rationale;
  • Ensuring a good reward for these factors through diversification of unrewarded (specific) risk, to improve long-term risk-adjusted performance while reducing short- and medium-term risk;
  • Sound risk management by implementing risk allocation between smart factor indices and risk-control options. The risk-control options offered by Scientific Beta also make it possible to respond to important fiduciary choices for investors or their asset managers, such as whether or not to respect sector neutrality, country neutrality or to use a market beta adjustment, which allows the market beta of the multi-factor strategy to be aligned with that of the market.

As part of its policy of transferring know-how to the industry, EDHEC-Risk Institute has set up Scientific Beta. Scientific Beta is an original initiative which aims to favour the adoption of the latest advances in smart beta design and implementation by the whole investment industry. Its academic origin provides the foundation for its strategy: offer, in the best economic conditions possible, the smart beta solutions that are most proven scientifically with full transparency of both the methods and the associated risks.
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