Automation, lower fees driving institutional interest in factor investing and smart beta strategies
Thanks to lower fees and the never-ending search for noncorrelated sources of alpha, more institutional investors are carving out allocations to factor investing and smart beta strategies. While these strategies are not new, technological advances have allowed managers to crunch more data and develop more robust approaches — at a lower cost than ever. These developments have also improved transparency, which has allowed investors to better understand what makes these strategies tick. In this roundtable discussion Oliver Schupp, Head of Investor Relations, North America at Capital Fund Management (CFM), Bernie Nelson, chief research advisor at Style Analytics, and Phil Tindall, senior director at Willis Towers Watson, discuss what investors need to know, how to allocate to factors and smart beta, how to measure these strategies and what the risks are.