3807179: After-Work Lecture: Smart Beta and the search for the Holy Grail

Beschreibung

The term “indexing” in equity markets is associated with the weighting of index constituents according to their absolute level of market capitalization. Accordingly, indi-ces such as the SPI in Switzerland, S&P 500 in USA and MSCI World are enjoying a quasi-monopoly. However, in recent years, academics and market practitioners alike have increasingly called into question the superiority of this classical indexing approach. Stark criticism has been aimed at the theoretical underpinning and its implications for the index construction process.
New alternative indexing methods – often referred to as "Smart Beta" – centering on, for example, fundamentals, risk, or return expectations have emerged and are now challenging the once firmly established norm of traditional indexing. What does the landscape of Smart Beta look like, are these new indices really smart, and most importantly, what do these new indices have to offer investors? Is the new Holy Grail, that could potentially replace the traditional market capitalisation-weighted index as the standard index, to be found among the smart beta indices?