For many years Towers Watson has been investigating smart beta strategies across a range of traditional and alternative asset classes. Over the last few years we have been working with the investment industry to move smart beta beyond theory to implementation. We are now deeply entrenched in the smart beta movement and globally our clients added 65 new smart beta mandates to their portfolios in 2012.
For something ‘smart’, we believe it is really quite simple. Smart beta gives the investor the opportunity to capture a:
- Wider spread of risk premia than conventional strategies
- Risk premium previously only available through expensive active strategies in a cheaper way.
In this paper, we provide an overview on the smart beta investment thesis and some of the more common and implementable strategies.