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FTSE Russell adviser survey finds smart beta strategies grow ever more popular


Key findings of the 2018 FTSE Russell smart beta adviser survey reveal that smart beta strategies are becoming a growing part of the asset allocation schemes of US-, UK- and Canada-based financial advisers.

However, the firm warns that implementation of these strategies is still evolving and advisers are keen to better understand how they can use smart beta to its full potential.

The report found advisers aware but not familiar. Across all three markets, there is a high awareness of smart beta strategies yet a low level of familiarity. Among financial advisors surveyed, 68 per cent in Canada, 72 per cent in the UK and 79 per cent in the US say they are “aware” of smart beta strategies, yet on average only 35 per cent of those surveyed are “very familiar.”

FTSE Russell reports that the outlook for adoption of smart beta strategies is strong in all three countries, with more than half of financial advisors surveyed in the UK and Canada and 40 per cent of those surveyed in the US expecting to increase their usage.

The firm writes that financial advisers in the US & Canada are looking for more information about smart beta strategies before increasing their usage. UK advisors are sceptical as to the benefit, expressing concerns over predictability of performance (35 per cent of non-users) and insufficient track records (32 per cent of non-users). And in the US, 47 per cent of advisers say they “don’t know enough about” smart beta strategies, suggesting an opportunity for continued education.

The survey uncovered differences in the use of smart beta across the three countries but all respondents believe these strategies help meet both strategic and tactical needs and complement active and passive investment strategies. Interestingly, findings indicate a continued evolution of how smart beta is being used. In the UK and Canada, eight out of 10 advisers view smart beta as best sitting alongside active strategies while, in the US, six of 10 advisers view smart beta as best sitting alongside passive strategies.

Rolf Agather, Managing Director of North America Research, FTSE Russell says: “The results of our second smart beta adviser survey show that there is continued and growing popularity of smart beta strategies among retail advisers. There is also a significant opportunity for growth in the wealth market but more education is needed. Importantly, the use of smart beta strategies is evolving and not all markets view these strategies in the same way, highlighting the need for more consistent global education and insight on smart beta index-based strategies for investment and portfolio allocation.”

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