FTSE Russell’s recent smart beta survey for 2017 reveals the extent of the shift in investors’ mindsets. Among asset owners who are using, evaluating or planning to evaluate smart beta index-based strategies, 57% of larger asset owners, revealed they are applying ESG considerations to a smart beta strategy. Moreover, 69% of respondents pointed to incorporating ESG was to “avoid long term risk”. While the move towards ESG appears to be global, it is most prominent among large European institutional investors.
In both North America and Europe, investor interest in smart and sustainable index-based strategies is strongest among the largest asset owners with AUM greater than $10 billion, Tony Campos, director, ESG product management said in a note. Within this investor-size category, almost 80% of asset owners domiciled in Europe anticipate applying ESG considerations to a smart beta strategy while 30% of asset owners domiciled in North America do, which may leave greater growth opportunity for ESG-related investments such as those in the ETF space.
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