Sustainable and Smart Beta


Sustainable and Smart Beta

Both are here to stay, why not take advantage?

Executive Summary

Smart Beta and ESG Investing have earned their respective places in the asset management landscape. While stemming from different investment philosophies, those two commercial successes need not work at cross purposes. Would an approach combining the two be a worthy addition, beyond its marketing appeal?

The fact is ESG1 investing and Smart Beta are not just commercial successes, nor mere happenstance. Both result from a broad evolution of the financial industry towards increased transparency and accountability. This dual demand could surely be attributed to defensive reactions specific to current financial markets but can also be considered from the larger standpoint of changing service expectations in any industry: accessibility, comparability, personalization and the possibility to give a feedback.

Smart Beta is but the transfer of a know-how previously kept in the active management industry to the front row of indexed investments. By disclosing the methodology and the details of their investments, the portfolio managers are not only giving away data, they are also empowering the end investors to challenge their process and their implementation. This provides in turn a rich toolbox of allocation techniques and experience that can be leveraged upon to address specific needs.

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Performance magazine issue 21, September 2016

Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients.

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