The growth in smart beta strategies is accelerating at a rapid pace, according to a new report from FTSE Russell.
Allocations to smart beta strategies reached a new peak of 46% of global asset owners, up from 36% last year – an increase of 10 percentage points, or almost 28%, according to the fourth annual FTSE Russell Global Institutional Smart Beta Survey.
Another 25% of asset owners are currently evaluating using smart beta strategies, indicating a “healthy pipeline” for future allocations, according to the survey.
“The survey results suggest that growth in smart beta is likely to continue at a robust pace,” said Rolf Agather, managing director of North America Research at FTSE Russell.
(Related on ThinkAdvisor: Smart Beta: Which Strategy Works Best Over Time?)
Smart beta strategies are alternatives to traditional market capitalization-based index strategies that attempt to deliver better risk-adjusted returns at a lower cost.
Asset owners with $1 billion to $10 billion in assets under management led the increase in use of smart beta strategies in the past year and adoption was strongest in Europe, where 60% of asset owners reported a smart beta allocation, followed by Asia Pacific (48%), then North America (37%).