french leading the way in smart innovation

On one hand were told that groups are feeling stretched and there are too many funds, on the other were seeing new names and innovative products… especially from the French.

french leading the way in smart innovation

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Carmignac Gestion is one of the newer players to make a push in the active management space, while yesterday La Française Asset Management unveiled its tie-up with S&P Capital IQ.

The likes of Ossiam, Tobam and Amundi are others making their mark, though they see their best route to growth by avoiding the clamour for alpha. There is certainly plenty of flexibility with this way of thinking and, as we have already seen though offerings from the likes of BNP Paribas’ Harewood Solutions arm, technical index-associated funds have their place in retail portfolios.

A middle-ground

For economists, the concept of smart beta has a greater association with California than it does Paris, though retail investors are being encouraged to take a different view. Ossiam, with its minimum variance and equal weight ETFs, and Tobam’s Anti-Benchmark Oeics offer what some might interpret as a middle-ground between active and passive management.

Defining smart beta is not easy because there are plenty of different methods in achieving what is essentially removing stock or sector biases from traditional market cap-weighted indices in order to boost returns or manage risk.

RDR and a general underperformance of active fund managers in volatile markets have contributed to what is perceived as move away from the long-established asset management names towards passives.

The new class

Trackers have a lot going for them; the most popular products often have the lowest TERs and they are simple to understand. Neither of these factors necessarily applies to the new class of products, while a lack of track record may also count against them. On the other hand, many wealth managers say they are keen to integrate them into their portfolios and there are plenty of opportunities for expansion across different asset classes.

I’ll be exploring the concept of smart beta, and giving a rundown on the available products in the July issue of Portfolio Adviser. For now though, let’s welcome the new names into the fold because the proliferation of me-too products is getting us nowhere.
 

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