A greater number big and institutional investors are also utilizing these smart beta strategies, with the largest rise in smart beta adoption this year among asset owners with $1 to $10 billion in assets under management, compared to the the largest rise in adoptions among owners with less than $1 billion last year.

As smart beta seeps into mainstream investment ideas, many view the strategies as alternatives for actively managed funds.

“Smart beta indexes are widely accepted by asset owners as an appropriate basis of an investable product, with 77% agreeing,” according to FTSE Russell. “Roughly half of asset owners view smart beta indexes as an appropriate benchmark for an active strategy.”

Among the more popular smart beta strategies, those surveyed revealed strong interest in applying ESG or Environmental, Social and Governance principles to investments, or better known as smart sustainability. In North America and Europe, interest in smart sustainability index-based strategies is the greatest among asset owners with assets under management of greater than $10 billion.

“Our fourth annual smart beta survey demonstrates asset owners have readily adopted smart beta indexes and continue to evolve their strategies based on these indexes,” Rolf Agather, managing director of North America research, FTSE Russell, said in a note. “Asset owners and consultants continue to increase their understanding of smart beta and are now harnessing the full spectrum of smart beta tools available. The survey results suggest that growth in smart beta is likely to continue at a robust pace. Responses indicate that adoption expectations of asset owners currently evaluating initial or additional smart beta index allocations remains strong and satisfaction with smart beta among current users remains high.”

For more on Smart Beta ETFs, visit the Smart Beta Channel home page.