Advisers split on smart beta classification

Advisers split on smart beta classification

Smart beta is defying classification, according to a Vanguard survey, which showed advisers are split over the definition of the strategy.

In a survey undertaken by Vanguard Asset Management, 35 per cent of the advisers polled thought smart beta was a passive strategy, while 29 per cent considered it active and 37 per cent were uncertain. More than 250 advisers were surveyed.

Smart beta funds are a passive vehicle which have an active skew. For instance, a smart beta fund could equally weight stocks in the index it tracks, or track a bespoke index created by an index provider.

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Neil Cowell, head of UK retail sales at Vanguard, the passive fund house, said: “Investors choosing these strategies should accept that, by moving away from the market-cap weighted whole-of-market portfolio, smart beta funds represent an active bet.”

The survey comes as experts predict the “next generation” of passive investing, betting that smart beta strategies will be the investments of choice going forward.