Scientific Beta sees strong growth in assets tracking its smart beta indices
Scientific Beta has announced that assets tracking its smart beta indices reached USD59.2 billion at December 31, 2019, against a 2018 figure of USD43 billion, an increase of USD16 billion, corresponding to year-on-year growth of 37 per cent.
Noël Amenc, CEO of Scientific Beta, says: “We are proud that the growth in Scientific Beta’s assets under replication has been one of the strongest in the smart beta market not only this year but over the last five years. In a market environment that has been challenging for factor strategies, we believe that our transparent and research-based approach to smart beta indexing has been the source of our clients’ trust in us.”
The year 2019 saw several innovations from Scientific Beta. The firm released on its platform enhanced Environmental, Social and Governance (ESG) and climate risk reporting to assist investors in meeting the challenges of incorporating ESG dimensions into passive investment management.
Scientific Beta also introduced a new off-the-shelf Low Carbon option for all its flagship multi-smart-factor indices. This filter reduces the carbon footprint of all of Scientific Beta’s multi-factor indices by almost 50 per cent.
The firm is now offering an ESG option for all of its indices, designed to enable investors to benefit from the performance of Scientific Beta’s High Factor Intensity (HFI) Multi-Beta Multi-Strategy (MBMS) indices while upholding ESG norms and reducing exposure to companies with high exposure to ESG risks.
A new service from Scientific Beta is the Scientific Beta Factor Analytics Services (SB FAS) offered to asset owners who wish to improve the diversification of their global equity allocation. SB FAS is part of a new factor investing approach, which, instead of ignoring the existing portfolio investments and considering each new investment as a standalone, offers a completeness or portfolio overlay approach, the firm says.
Recently, Scientific Beta introduced the Maximum Volatility Protection (MVP) option, which, added to Scientific Beta’s High Factor Intensity (HFI) Low Volatility index, is designed to provide a highly defensive offering when needed with a reduction in the index’s market beta in difficult times and very strong protection of the capital.
Scientific Beta writes that it has, for several years, offered risk control options such as sector neutrality, country neutrality or market beta adjustment on its flagship multi-factor indices to correct for these risks. Scientific Beta is now offering a new risk control option called Historical Volatility Adjustment (HVA) that controls for volatility, manages volatility through time and targets the historical volatility of the multi-factor index, thereby reconciling factor investing and reduction of these risks.