Institutional asset owners are adopting smart beta strategies at a relatively rapid rate, with deployment reaching record levels. According to the latest FTSE Russell Global Smart Beta Survey, 48% of global asset owners are using smart beta strategies, up from 26%, 36% and 46%, in each of the previous three years.
European asset owners have embraced these strategies more than their U.S. counterparts — 61% of European asset owners use smart beta versus just 42% of U.S. asset owners — but adoptions in the U.S. have increased at a faster rate. They rose by 5 percentage points between 2017 and 2018 while they only inched higher 1% among European managers, according to the FTSE Russell survey.
(Related: Smart-Beta ETFs Cross 10-Year Threshold)
Altogether, 185 asset owners with more than $3.5 trillion in cumulative assets under management were surveyed by FTSE Russell. Slightly more than half (54%) were based in the U.S.; 31% in Europe, 11% in Asia Pacific and 4% in other areas. More than half of the asset owners surveyed (56%) had $10 billion or more in assets; 39% had less than $1 billion and 44% had between $1 and $10 billion in assets. They included government organizations, corporations or private businesses, nonprofit organizations or universities and unions or industrywide pension schemes.
About two-thirds manage defined benefit plan assets; one-third manage defined contribution plans and 15% manage endowments or foundation assets. (There is overlap.) The survey also included asset owners with insurance general accounts and sovereign wealth funds.
(Related: When Buying Smart Beta ETFs, Know What You Own )