Smart Beta Allocations Double in 12 Months, Says Towers Watson

Investors are hungry for smart beta and are moving into alternative assets for access.

(February 19, 2014) — Towers Watson’s institutional investment clients allocated more than double the amount of assets to smart beta strategies in 2013 than the year before, the consultant has announced.

In the 12 months to the end of 2013, the consultant’s clients around the world plunged $11 billion into smart beta strategies across 180 portfolios. This was more than twice the $5 billion allocated in 2012 by 130 portfolios.

The inflows meant Towers Watson clients have allocated a total of $32 billion around the world to almost 500 portfolios across a range of strategies, the firm said.

Smart beta’s “inherent relevance for most institutional investors” explains the push, said Craig Baker, global head of investment research at Towers Watson.

And investors have been moving into alternatives using the approach, Baker said. Over the year, a quarter of the $4 billion invested in real estate went through smart beta, followed by a third of investments in direct hedge funds (more than $3 billion), followed by infrastructure (more than  $2 billion) was in smart beta strategies.

However, core strategies attracted most of the money. Baker said the number of equity smart beta mandates doubled in 2013, and tripled in size of assets, compared to the year before, but warned: “We are somewhat concerned about the proliferation of products now on the market that claim to be smart beta, particularly in the equity area.” 

Related content: How to Step Up the Game in Equity Portfolios & What It Takes to Go Smart Beta

(February 19, 2014) — Towers Watson’s institutional investment clients allocated more than double the amount of assets to smart beta strategies in 2013 than the year before, the consultant has announced.

 

In the 12 months to the end of 2013, the consultant’s clients around the world plunged $11 billion into smart beta strategies across 180 portfolios. This was more than twice the $5 billion allocated in 2012 to 130 portfolios.

The inflows meant Towers Watson clients have allocated a total $32 billion around the world to almost 500 portfolios across a range of strategies, the firm said.

Smart beta’s “inherent relevance for most institutional investors” explains the push, said Craig Baker, global head of investment research at Towers Watson.

And investors have been moving into alternatives using the approach, Baker said. Over the year, a quarter of the $4 billion invested in real estate went through smart beta, followed by a third of investments in direct hedge funds (more than $3 billion), followed by infrastructure (more than  $2 billion) was in smart beta strategies.

However, core strategies attracted most of the money. Baker said the number of equity smart beta mandates doubled in 2013, and tripled in size of assets, compared to the year before, but warned: “We are somewhat concerned about the proliferation of products now on the market that claim to be smart beta, particularly in the equity area.” 

Related content: How to Step Up the Game in Equity Portfolios & What It Takes to Go Smart Beta

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