Not all smart beta portfolios are created equal
Insurance investors drawn to smart beta by the prospect of excess returns, lower volatility and lower fees, have begun to think in terms of combining factors rather than taking exposure to individual ones. In this article we discuss techniques to combine factors that are designed to lead to better risk/return outcomes.
As demand for smart beta investing continues to grow amongst insurance investors, ‘Not all smart beta portfolios are created equal’ explores the technique of multi-factor investing to obtain greater diversification and better risk/return outcomes. We believe for insurers, the smoother excess returns multi-factor investing aims to achieve could reduce balance sheet volatility or increase the attractiveness of the products they offer to their clients.