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Index IDEA: Multi-factor top-of-mind

Results from FTSE Russell’s fifth annual global institutional smart beta survey, shared earlier this month, found that 70% of asset owners who are in the process of evaluating smart beta are evaluating multi-factor combination strategies, far surpassing all other strategies measured. Additionally, 87% of those who have had a smart beta allocation for less than two years report using a multi-factor approach.

These findings are underscored by a steadily rising interest in multi-factor smart beta combination strategies. For asset owners with an existing smart beta allocation, multi-factor combinations were used by 49%, a notable rise from 20% when FTSE Russell first measured this area in 2015.

In addition, according to ETF data and analytics provider XTF, global assets under management in ETFs tracking smart beta indexes have increased more than five-fold since January 2015, when the FTSE Russell survey began tracking multi-factor usage, going from $6.8 billion to $35.1 billion as of April 30, 2018.

Source: FTSE Russell, Smart beta: 2018 global survey findings from asset owners.

Rolf Agather – managing director, North America Research, FTSE Russell

“With five years of results for our global smart beta survey, we are able to offer unique insight across the industry on how the preferences and needs of our global clients are changing. Notably, our findings illustrate the growing awareness and usage of multi-factor index-based investment strategies in recent years.”

David Mazza – head of ETF investment strategy, OppenheimerFunds

“The FTSE Russell research and XTF data confirms what we have observed among our clients in recent years. Investors are becoming increasingly interested in finding more efficient ways to blend various market exposures in a long-term portfolio and innovative new smart beta index approaches have helped make this possible.”

Get more information on the 2018 FTSE Russell Global Institutional Smart Beta Survey.
 

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