Smart beta, is being hailed as the answer to many a wealth manager, financial adviser – and pension trustee’s dilemma. While we are all facing downward pressure on fees it seems a good idea to use a blend of cleverly tweaked tracker funds and see the portfolio outperform it’s benchmark more than justifying costs and charges.
Pensions minister Steve Webb has confirmed that from next April there will be a cap on pension charges of 0.75 per cent a year. Since the cap was initially proposed there has been a backlash among the pensions industry - AllianceBernstein argues that more expensive investment strategies will incorporate more investment sophistication, and features designed to get a better risk/return trade off, while Schroders says a price cap could place even further downward fee pressure on the investment component of the default; unsuitable for DC schemes where it is real outcomes that matter, rather than relative performance. So one solution being proffered up to bridge the void between performance and cost is smart beta.
To “Understanding Smart Beta”, one must first accept that there is a wider framework than the narrow definitions of alpha and beta that classic finance theory puts forward. In this framework, somewhere between alpha and beta, lies smart beta. Enable’s IFA’s are here to help.
Issued by: Enable Independent Financial Life Planners
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Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE
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