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May 13, 2019

Advisers have limited confidence in implementing strategic beta investing

Only 36% of financial advisers have confidence in implementing strategic beta investing in client portfolios, even though 98% of the advisers are familiar with the subject.

The findings are from a survey by Columbia Threadneedle Investments, which polled 299 advisers.

The key reasons cited for implementing strategic beta investing were enhanced diversification, incorporating factor-based investments and active manager insights in a passive product.

Of those polled, 18% said that they could name most or all of the portfolio managers of the ETFs they use.

On the other hand, 27% of the advisers said that they can do so for the actively managed funds used.

Columbia Threadneedle Investments head of strategic beta Marc Zeitoun said: “We believe it’s important for advisers to scrutinise passive investments that they are considering for their clients. Advisers need to look under the hood and see who is creating the rules and on whose investment experience they are relying.

“We don’t think investors appreciate the unintended consequences of investing in certain benchmark passive strategies.

“Just because a fund tracks an index doesn’t mean we shouldn’t take the time to understand how securities in the index are selected.”

Columbia Threadneedle Investments tends to individual, institutional and corporate clients.

The business had $459bn in assets at the end of March 2019. It has a staff headcount of over 2,000.

 

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