FTSE Russell today confirmed that smart beta strategies are becoming a growing part of the asset allocation schemes of US-, UK- and Canada-based financial advisors. However, implementation of these strategies is still evolving, and advisors are keen to better understand how they can use smart beta to its full potential.
According to a new FTSE Russell advisor survey, 68% to 79% of US-, UK, and Canada based financial advisors are ‘aware’ of smart beta investment strategies but only 35% on average are ‘very familiar’ with them. Although outlook for future use is strong in all three countries, advisors are still skeptical and looking for more information.
As smart beta implementation is still evolving, financial advisors are divided as to whether it compliments active or passive investment strategies. Interestingly, findings indicate a continued evolution of how smart beta is being used. In the UK and Canada, 8 of 10 view smart beta as best sitting alongside active strategies while, in the US, 6 of 10 advisors view smart beta as best sitting along passive strategies.
UK advisers are skeptical as to the benefit, expressing concerns over predictability of performance (35% of non-users) and insufficient track records (32% of non-users). And in the US, 47% of advisors say they “don’t know enough about” smart beta strategies, suggesting an opportunity for continued education.