Alternative Beta Rises

“Factor-based and alternatively-weighted indexes have transformed the investment landscape,” said Rolf Agather, managing director of North America Research for FTSE Russell “It is clear that retail advisors are embracing investment products based on these indexes as a way of incorporating new ideas into their clients’ portfolios.”

Other key findings from the study include:

• 46% of RIAs provided unaided affirmation of using investment products based on smart beta indexes, compared to 32% for other types of financial advisors

• Dividend, high quality, equal weight and fundamental approaches are most popular alternative beta strategies

• Advisors are most likely to use a smart beta approach that weights companies by historical dividend yield, with 36% adopting this type of smart beta investment product and 35% interested in using it

• When shown examples of smart beta investment products, 89% of non-users of smart beta expressed an interest in trying these products

• Advisors using smart beta investment products are more likely to have practices that extend beyond the core activities of investment selection, asset allocation and financial planning

Among the 307 survey respondents were wirehouse brokers (29%), regional broker dealers (23%), RIAs (23%) and independent broker dealers (21%). Also, 81% of polled participants manage more than $50 million and 52% manage more than $100 million.