Risk premia and smart beta are at the forefront of investors’ agendas, according to a survey conducted by Citi’s Prime Finance Capital Introduction team.
The results showed that 81% of respondents are currently investing in, or looking to invest in, the investment solutions traditionally defined as strategies that aim to capture risk-adjusted returns and improve portfolio diversification.
In addition, 86% expect their risk premia and smart beta investment to rise in the next three years.
The main drivers for risk premia investing were volatility mitigation followed by return optimisation.
According to Citi, AUM in smart beta and risk premia funds are projected to rise from $265 billion in 2014 to $1.2 trillion by the end of 2019.
The survey also showed that 53% of respondents are planning on increasing their exposure to hedge funds over the next three years.
“Hedge funds represent a third of profits generated by the asset management industry and these findings confirm the importance of the sector to institutional investors,” said Daniel Caplan, EMEA head of investor services sales, Citi.
As interest in risk premia solutions continues to rise, we expect hedge funds to play an increasingly important role in providing diversification through risk-aligned strategies.”
Interest in risk premia and smart beta continues to soar
Risk Premia and Smart Beta are at the forefront of investors’ agendas, according to a survey conducted by Citi’s Prime Finance Capital Introduction team.