The fund tracks an index compiled by ERI Scientific Beta, an index firm established by the EDHEC Risk Institute. Scientific Beta enjoys a global reputation for its Smart Beta competencies in general, and in Multi-factor indices in particular. Its other global partner firms include: Morgan Stanley, Legal and General and Amundi.
The fund’s aim will be to capture academically-proven investment styles in the market within one holistic index approach. These factors are: momentum; value; low Investment; profitability; size and low volatility. The solution is suitable for investors looking to incorporate a low cost, rules-based, Smart Beta equity solution into their investment framework with an additional level of diversification by combining multiple factors and therefore smoothing the cyclicality that is associated with individual factors.
Gareth Stobie, MD at CoreShares says: “This Multi-factor approach allows investors to ‘harvest’ various investment styles in a low cost and transparent way, we see multi-factor as an important part of the market going forward.”
Multi-factor investing has been cited by many as a growing trend in asset management as it is significantly less costly than active management yet captures a significant portion of active managers’ value proposition. The UK based Boots Pension Scheme, recently awarded its entire equity allocation to a Multi-factor strategy that replicates a Scientific Beta index, further highlighting this trend.
Noël Amenc (PhD), CEO, ERI Scientific Beta, says that, “The key advantages of this smart multi-factor approach are its diversification not only of factor risk but also of specific risk and its top-down approach to risk allocation, thus meeting investors’ concern to keep risk management at the forefront of their investments.”
The fund was started effective 1 October 2017 and has a service charge of 0.4% (excl. VAT). It will be made available via various LISP platforms and directly to multi-managers and institutions.