AXA launches AXA IM SmartBeta Equity strategy
AXA Investment Managers has launched AXA IM SmartBeta Equity strategy designed to provide long term investors with a more efficient way to capture equity market beta while avoiding the limitations of both market cap weighted indices and alternative weighted schemes.
AXA IM’s SmartBeta Equity strategy is designed to retain what is good about market capitalisation weightings but reduce the exposure to wealth destroying elements – namely exposure to poorly compensated risks, poor diversification, failing to look towards the future and cost leakage.
The AXA IM SmartBeta Equity strategy is constructed around the same three building blocks as AXA IM’s SmartBeta Bond strategies. The three elements are:
– Filter: rules based filters aim to reduce exposure to uncompensated risks,
– Diversify: intelligent diversification aims to avoid concentration risk while managing liquidity
-Implement: rebalancing and trading in a way that leverages our experience as investors, while keeping costs low.
Tim Gardener, Global Head of Consultant Relations, AXA IM, said: “Most investors are now aware of the pitfalls of market cap weighted indices, in fact an industry has sprung up to address these failings. However, we believe that whilst alternative solutions go a long way towards overcoming the drawbacks of market cap none address the problems inherent in index tracking.”
By introducing four long-term beta harvesting guidelines, AXA hopes to shift the focus from which index an investor should blindly follow to the production of solutions which harvest equity beta cheaply and efficiently. We believe that our SmartBeta equity strategy is the viable alternative that investors have been seeking.
“In harvesting beta, a smart investor does not want to take ‘bets’ as an active manager might, although they are persuaded of the need to avoid the pitfalls of blindly tracking an index. The smart investor recognises that equity investing involves taking on risk, but wishes to limit both longer term loss of wealth and shorter term downside volatility by avoiding as far as possible the stocks that are overvalued when markets head south,” he added.