Investors back smart beta ETFs

Survey2Many investors are positive towards smart beta but want to see more product development, a survey has found.

Two-thirds of 180 European exchange-traded fund (ETF) investors that were surveyed said smart beta indices provided significant potential to outperform cap-weighted indices in the long term.

Just over 80% said smart beta ETFs were a good alternative to cap-weighted indices, which they said were concentrated in very few stocks or sectors.

The survey, by academic body Edhec-Risk Institute, found a growing appetite for smart beta ETFs, with the 49% of respondents that invested in smart beta in 2014 rising to 68% last year.

However, ETFs based on smart beta indices represent the top concern for respondents. Nearly 40% wanted more developments in this area.

More broadly, the survey found that ETFs make up an increasing part of investors’ portfolios across all asset classes and that nearly all respondents were satisfied with equity ETFs last year.

Cost consideration was the main driver for ETF growth.

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