Smart beta talk permeates the chatter at every investment conference -- but that doesn’t mean smart beta is trickling into every portfolio.
According to a recent survey of advisors by Boston-based Columbia Threadneede Investments, a little more than half of investment advisors are using smart beta funds.
More than two-fifths of the survey respondents, 44 percent, said that they do not use smart beta at all.
Almost three-fifths of respondents use smart beta products to complement a benchmark index exposure or an active manager, while 27 percent employ the products to replace an active manager or core benchmark exposure. The survey found several reasons for using smart beta funds, but the most popular reason, cited by 28 percent of respondents, was to lower overall fees for clients.
Other reasons for using smart beta included a desire to access specific factors, named by 26 percent of respondents; targeting a specific investment outcome, 20 percent; and accessing a specific geography or sector, 17 percent.
Survey respondents named smart beta strategies’ underlying index rules as the most important factor in fund selection, followed by fund performance and cost.
Columbia Threadneedle’s survey questioned 75 financial advisors and investment professionals, with two-thirds managing more than $100 million in AUM, between Dec. 1, 2016, and Jan. 10, 2017.