Hope for better returns piques interest in factor investing – survey

first_imgInstitutional investors are increasingly using factor-based strategies, with their motivation shifting from risk management to improving performance, according to a survey sponsored by BlackRock.The survey was of 200 executives from institutional investment organisations in 20 countries across the Americas, the EMEA and Asia Pacific, with more than $5.5trn (€4.8trn) in assets under management.According to BlackRock, the survey found that factor use was widespread and on the rise.More than 85% of respondents employ factors in some part of the investment process, and nearly 66% of the organisations surveyed said they had increased their usage of factors over the past three years. Sixty per cent of respondents said they planned to increase their use of factors over the next three years.The desire to improve returns was the most important motivation for increasing factor use, said BlackRock.For new factor users, the top motivation is to better understand risk and return.The same percentage said they achieved this goal, while 59% said they increased diversification, and similar proportions said they lowered risk (56%) and increased returns (55%).More than half (53%) of the institutions surveyed use investment strategies targeting one or more factors, according to BlackRock, with value being the most commonly targeted style factor and inflation the most commonly used macro factor.Equity factor strategies – smart beta, for example – are most widespread, used by 68% of investors, but 57% of respondents investing in factors also use more advanced long/short multi-asset strategies.More than two-thirds of respondents seeking to increase factor use over the next three years will be working on their risk-management systems, while more than half expect to seek advice from asset managers, and 37% expect to hire additional staff.Half of those increasing said they would make an initial allocation to an investment strategy to monitor performance, according to BlackRock.Andy Tunningley, head of strategic clients at BlackRock’s UK institutional business, said the “unexpected correlations” of asset performance during the financial crisis spurred investors to better understand underlying risks, and that this had piqued interest in factor strategies.“Following an initial focus on risk management, investors increasingly believe factor strategies can drive enhanced performance,” he said.The results of BlackRock’s survey, conducted by the Economist Intelligence Unit, come after ERI Scientific Beta, a provider of smart beta indices, late last month published research, “Smart beta is not monkey business”, rejecting claims the results of smart beta strategies could be generated by any random selection of stocks.ERI Scientific Beta, part of EDHEC-Risk Institute, said it ran tests that “directly invalidate” these claims and that “many smart beta strategies display exposure to factors other than value or small cap, as well as pronounced differences in factor exposures across different strategies”.Factor investing is based on the idea that the risks and returns of all investments can be linked back to a common set of underlying factors.These can be what are referred to as style factors, such as size, momentum, quality and value – or macro-economic factors, such as growth, inflation and interest rates. Smart beta is an alternative term and captures the idea that investment strategies based on factors such as these, rather than market capitalisation, can add value.See April’s IPE magazine for a special report on factor investinglast_img read more

ASA forces Paddy Power to modify Rhodri Giggs loyalty advert

first_img Submit Related Articles The UK Advertising Standards Association (ASA) has upheld five complaints made against Paddy Power’s ‘Rewards Club’ advertisement featuring Rhodri Giggs, the older brother of former Manchester United and Wales footballer Ryan Giggs.Complaints were sanctioned against the advert, which was broadcast last February, as five viewers claimed that the advert ‘glamourised gambling’ by suggesting that it can lead to a better lifestyle.Promoting the bookmaker’s new Rewards Club loyalty programme, Paddy Power ‘Ambassador’ Rhodri Giggs is seen drinking champagne and driving a sports car which has ‘Thanks Paddy’ embedded on its bodywork.Responding to the complaints, Paddy Power marketing details that at no point during the advert does Rhodri Giggs participate in gambling/betting.Furthermore, Paddy Power underlines that Rhodri Giggs is promoting a loyalty programme over standard betting products, odds or markets promoted by bookmakers.In its response, Paddy Power maintains that the ‘sports car’ is used as a prop to emphasise customer loyalty as the key attribute of its Rewards Club messaging.Following a review, ASA has upheld the complaints made against the advert, detailing in its assessment that the advert implies that ‘viewers should follow Rhodri Giggs example’. “We considered that created the impression that Rhodri was no longer defined by the alleged affair and that he had moved past his “loyalty” and was now reaping the rewards, both financially and in terms of his own self-image,” said ASA.“The ad implied viewers should follow his example, and that their route to doing so was joining Paddy Power’s Rewards Club. For that reason, we considered the ad implied gambling was a way to achieve financial security and improved self-image, and we concluded the ad was irresponsible.”The watchdog has therefore judged the advert to have breached its ‘BCAP Code Rules’ on responsible advertising with regards to gambling products. ASA has issued no fine to Paddy Power, but has enforced that the bookmaker can not show the advert again in its original format. Share UK gambling adopts toughest online advertising code to protect underage audiences August 27, 2020 Share StumbleUpon ASA monitoring sweep marks gambling as the worst underage advertising offender August 26, 2020 Flutter moves to refine merger benefits against 2020 trading realities August 27, 2020last_img read more