ETFWorld.co.uk

New FTSE Russell Survey Measures Financial Advisor use of Smart Beta

Two thirds of financial advisors using ETFs using smart beta . Advisors utilising smart beta younger with more AUM in ETFs and alternatives. More than 70% of advisors adopting more than one smart beta approach…


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FTSE Russell, has issued research findings showing that 68% of financial advisors using ETFs are incorporating smart beta investment products into their client portfolios.

According to FTSE Russell’s first US retail financial advisor market survey – Smart Beta: 2015 survey findings from U.S. financial advisors – advisors utilizing smart beta products tend to be younger, have a higher share of AUM in ETFs and alternative investments, and have practices which extend beyond the core activities of investment selection, asset allocation and financial planning.

In addition, the survey found that registered investment advisors (RIAs) are more likely than regional, independent and wire house advisors to be aware of the term “smart beta.” Notably, more than 70% of financial advisors who adopt smart beta utilize more than one product, with dividend, high quality, equal weight and fundamental the most popular products.

Rolf Agather, Managing Director of North America Research for FTSE Russell, said:

“Factor-based and alternatively-weighted indexes have transformed the investment landscape. 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. Our findings indicate that retail financial advisors view smart beta as an important portfolio tool for addressing investment challenges.”
Summary of Key Findings:

Advisors are using “smart beta” strategies, even if they are not always familiar with the term

• Without the help of descriptive examples, 35% of advisors reported having used a smart beta investment product yet, when prompted by specific product names, 68% identified themselves as users

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

• Advisors express an interest in using smart beta investment products to protect portfolios in down markets, control volatility and increase alpha, objectives often associated with active management Dividend, high quality, equal weight and fundamental smart beta approaches are most popular

• 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

• High quality (27%), equal weight (26%) and fundamental (23%) are the next most widely used smart beta investment products after dividend

• More than 70% of financial advisors using smart beta apply more than one type of approach

Smart beta-using financial advisors younger, more holistic and have RIA designations

• Advisors using smart beta investment products tend to be younger and have a higher share of assets in ETFs and alternative investments

• 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

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

Source: ETFWorld.co.uk

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