In the exchange traded fund space, so-called smart-beta indexing methodologies are turning heads. Pension funds, though, are still sticking to what they know.
According to a recent Russell Investments survey of asset managers, most managed portfolios remain in traditional asset strategies, even as smart-beta fund adoption expands, reports Carl O’Donnell for InvestmentNews.
“More and more people are adopting smart beta products, but I wouldn’t expect a revolution,” Rolf Agather, managing director of Russell Indexes, said in the article. “This will occur at a slow and steady pace during the early days of adoption.”
The Russell survey also reveals that smart-beta fund investors are using the strategies as a tactical, short-term trade instead of a core, long-term position.
“I think we are seeing that most asset managers are still trying to figure out where these products fit,” Agather added. “They are taking smaller, tactical allocations rather than big, strategic allocations.”
Nevertheless, institutional investors have expressed an interest in smart-beta products or are at the very least evaluating the strategies. [Institutional Adoption of Smart Beta ETFs on the Rise, Says Russell]