Rory Maguire: Could smart beta really replace active management?

Cause and effect not so clear

clock • 3 min read

As computers grow ever more powerful, the rise of smart beta strategies may seem inevitable but, argues Rory Maguire, there are some very human reasons to think it might not be

Over the past year, we have found ourselves increasingly being asked whether smart beta could replace traditional active management and so drive down investment fees. Computer-generated portfolios, the argument goes, could create strong alternatives to managers with a proven and predictable stylistic bias, such as Fundsmith or the Schroder Recovery team. The availability of ‘quality' and ‘deep-value' smart beta products would suggest their providers certainly think this is a possibility. Another strong argument is that we live in a world where there is so much data for humans to proce...

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