02.05.2014

Smart Beta Indices Launched

02.05.2014
Terry Flanagan

ERI Scientific Beta has announced that all of its smart beta indices available on its platform are fully compliant with regulatory recommendations on the transparency of financial indices, allowing any counterpart in the index market to check and analyze their track records.

“EDHEC-Risk Institute has been calling for many years for free access for investors to data relating to reference indices,” said Noël Amenc, director of EDHEC-Risk Institute and CEO of ERI Scientific Beta. “We believe that making information available, not only on returns but also on the weighting of the stocks in the indices and their historical composition, is essential for investors to be able to carry out their due diligence on those indices with full independence. To our knowledge, ERI Scientific Beta is the only provider to offer this full transparency.”

Over 500 asset owners and asset managers are using ERI Scientific Beta’s smart beta indices either to invest in, or to benchmark, active smart beta strategies. Since its launch at the end of April 2013, the Scientific Beta platform has received over 24,000 visits, with an average of 1,300 weekly connections.

Smart beta strategies seek to offer investors an alternative to the traditional passive and active portfolio construction options. Through smart beta ETF strategies, investors have the opportunity to retain broad market exposure, potentially achieve long-term outperformance when compared to an index, and reduce portfolio risk.

Scientific Beta Indices are smart beta indices that aim to be the reference for the investment and analysis of alternative beta strategies. Scientific Beta Indices represent different alternative beta strategies and allow for a flexible choice among a wide range of options at each stage of their construction process, the company said. This choice enables users of the platform to construct their own benchmark, thus controlling the risks of investing in this new type of beta. The Scientific Beta platform offers 2,958 smart beta indices.

Separately, Market Vectors ETF Trust has launched four new ETFs powered by factor-based indices from MSCI. They are: Market Vectors MSCI International Quality ETF, Market Vectors MSCI Emerging Markets Quality ETF, Market Vectors MSCI International Quality Dividend ETF, and Market Vectors MSCI Emerging Markets Quality Dividend ETF.

“Quality as an investment factor has historically outperformed broad international and emerging markets equities with relatively lower volatility over long time periods, but until now, a quality-focused, factor-based approach has usually been accessible only through active strategies,” said Amrita Bagaria, international equity ETF product manager at Market Vectors. “We’re very excited to introduce these quality factor ETFs to the broad investment marketplace, and we are particularly pleased to be partnering with MSCI, a global leader in international indexing.”

He added, “We have heard the concerns of investors who understand that you need to be selective and find a way to identify quality stocks, because you don’t necessarily want to hold every single company when investing in international or emerging markets.”

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