The Financial Times reports that there has been a “large spike in ‘smart beta’ investments:”
Interest in “advanced” or “smart beta” investment strategies is accelerating, with growing numbers of investors adopting alternative weighting schemes in equity and fixed income portfolios.
Inflows into advanced beta funds reached $15bn in the first three months of 2013, up 45.3 per cent on the same period a year ago. This was the strongest quarterly inflow for three years, according to an analysis by State Street Global Advisors of Morningstar data.
Total inflows into advanced beta funds over the past three years was $81.6bn. Most of the growth is being generated via exchange traded funds, which have attracted inflows of $66.2bn over the past three years.
Our four momentum ETFs have seen similar growth patterns. As reported by Invesco, these ETFs have had inflows of $501 million so far this year:
As of 6/24/13 (click to enlarge)
Strong demand for smart beta strategies is now being seen across all levels of the industry, including institutional investors:
“Index-based investing is becoming much more sophisticated,” said Scott Stark, director of Russell Indexes Europe. He says discussions with institutional investors and pension funds over the past year have been dominated by questions about advanced beta.
“The depth of conversations with clients about advanced beta has shifted dramatically. More and more are asking how best to incorporate advanced beta strategies into their portfolios,” added Mr Stark.
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