Aberdeen Asset Management has launched its inaugural smart beta fund, the Smart Beta Low Volatility Global Equity Income Fund, on the Aberdeen Global platform in Luxembourg.
The Fund offers exposure to five targeted ‘risk premia’ factors: value, quality, momentum, small size and low volatility. The investment objective is to provide investors with risk-adjusted returns with an emphasis on income generation and a volatility well below that of global equity markets over a full market cycle. The Fund has been launched with USD 139 million of client capital.
It is being managed by the quantitative investment team under the leadership of Sean Phayre, which already manages USD 77 billion in assets (as at the end of December 2016 on a fully-diluted basis including the carve-out from multi-asset portfolios).
Formed in 2005, the quantitative investment team manages a diverse range of systematic products across the risk-return spectrum including passive, enhanced passive, smart beta (SMARTER Beta™), and active quant strategies. Using proprietary, systematic approaches to investing, the team manages equity, fixed income, and derivative portfolios across all markets to provide clients with cost-effective, risk-controlled, and transparent customised solutions.
This Fund is a precursor to Aberdeen Asset Management’s forthcoming launch of proprietary SMARTER Beta™ indices – covering eight index families including Balanced Multifactor, High Income Multifactor, Value Multifactor, Quality Multifactor, Momentum Multifactor, Low Volatility Multifactor, Small Size Multifactor, and ESG Multifactor – that will showcase the firm’s multifactor investing expertise.
Sean Phayre, Global Head of Quantitative Investments at Aberdeen, comments: “Smart beta is increasingly viewed by sophisticated investors and their consultants as a third approach to investing that combines benefits of both active and passive management. In particular, smart beta aims to achieve above market returns or below market risk. Sometimes, they can aim to achieve both, as is the case with our own SMARTER Beta™ capability. “Smart beta strategies use ‘risk premia’ factors whilst retaining the numerous benefits of conventional indexing such as simplicity, objectivity, transparent and relatively low costs. Having successfully employed factor based investing within its investment strategies since 2005, Aberdeen’s quantitative investment team is well placed to offer differentiated smart beta strategies.
David Wickham, Global Head of Smart Beta at Aberdeen, added: “Smart beta is one of the fastest growing segments of the asset management industry. It has rapidly grown – and is expected to continuing doing so – due to a confluence of reasons. These include the recognised flaws of cap weighting which is driving investors to focus on non-market cap weighting schemes; a lower return environment forcing some investors to become more fee sensitive, and changing investor behaviours where increasing sophistication is creating demand for passives, solutions and alternatives. Given these trends, interest in smart beta products, and multifactor ‘risk premia’ strategies in particular, is building as investors see the advantages of conventional indexing but are keen to target higher risk-adjusted returns. Smart beta is thus a third approach to investing that provides a pragmatic and cost-effective core solution to current investor needs.”
The Luxembourg-domiciled Fund has initial been registered for sale in Luxembourg, Switzerland and the UK only.
