Smart beta allocations to double, says Invesco

Smart beta portfolio allocations by European investors are expected to rise to 20% in the next three years – almost double the current allocation.

Bryon Lake, head of Inveco’s Powershares which provides smart beta products, told Funds Europe: “People have become more comfortable talking about and using smart beta strategies.”

In a Powershares report, the firm said 95% of the 380 investors interviewed in Germany, Italy, Switzerland and the UK, were considering smart beta to access European equities.

The report – called ‘A tool for provision and control’ – showed that just over half of the investors already used smart beta to access European equities, followed by US large-cap equities, with 43% employing it.

A financial adviser from Italy is quoted in the report giving insight into smart beta usage. “I had a vague idea of the outcome I wanted. I use smart beta for diversification and to have a better risk-return profile.”

Lake said: “We’ve made a leap to people using smart beta as part of their business and getting deeper into their portfolio and how they’re implementing smart beta.”

One area that smart beta is finding hard to penetrate is fixed income. The report found that although only 10% of investors surveyed used smart beta for investing in high yield corporate bonds, a further 46% would consider it.

This is the case for most fixed income classes, where there was a low figure using smart beta, but many more considering it.

“I still think that the smart beta universe is quite young, it shows that attitudes to smart beta fixed income are changing although it is only a few years old,” said Lake.

©2016 funds europe

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