Building Equity Portfolios

Building Equity Portfolios with Style

  • Mercer Campaigns

    INVESTING IN LOW VOLATILITY
    EQUITIES

    A “low volatility” equity strategy is a valuable component of a well-diversified equity portfolio.

  • Mercer Campaigns

    “SMART BETA”
    “ADVANCED BETA”
    “INTELLIGENT INDEXING”

    A comprehensive look beneath these catchy titles

Executive Summary


Much has been written recently about “smart beta,” “advanced beta,” “intelligent indexing,” and various other buzzwords — broad terms that are not always well-defined. Looking beneath these catchy titles, we believe that it is important to focus on the underlying drivers of return and how this can help investors with constructing and monitoring their portfolios. We have been helping clients implement equity structures with explicit allocations to style factors for many years. This short paper serves as a primer on approaches to capturing a range of return drivers in global equity portfolios.

Building Equity Portfolios with Style

A primer on approaches to capturing a range of return drivers in global equity portfolios.

Fill out form to download



Mercer believes an allocation to a “low volatility” equity strategy is a valuable component of a well-diversified equity portfolio. Exposure to low volatility stocks can be achieved via a “systematic” low volatility approach or a fundamental “defensive-quality” approach. However, the choice of approach requires careful consideration as portfolio characteristics and performance can vary significantly.

Investing in Low Volatility Equities

A discussion reviewing the rationale for investing in low volatility equity.

Fill out form to download


Smart beta: what is it? why is it better than traditional beta?

Session 1

 

Smart beta can be summarized as a systematic investment strategy, where the return pattern is driven by some factor or group of factor being accessed. This session hosts the following panelists:

 

  • Vis Nayar - Global Head of Investment Research, HSBC Global Asset Management
  • Ana Harris - Portfolio Strategist, Global Equity Beta Solutions, State Street Global Advisors
  • Phil Edwards - European Director of Strategic Research, Mercer
  • Tim Gardener - Head of Institutional Client Strategy, AXA Investment Managers
   

Session 2

 

The following panel looks at blending factors rather than a single factor strategy. Investors expect a single factor will under perform for potentially a 3-5 year period. Therefore, investors have to develop a certain level of conviction in the underlying economic argument, so that they can ride out those periods of volatility and remain invested. Combining different factors at different times of the cycle is important, particularly as Trustees normally operate in a 3 year cycle.

 

 

   
   

Session 3

 

This session delves into the merits of standalone multi-strategies vs combined multi-strategies. If you have a blended product it is much harder to disaggregate returns, as you just see the overall outcome. If you have three separate strategies, you can then apply specific analysis around each individual one to determine whether it is performing exactly as you expected. Value and growth is rarely considered, as these tends to go in different directions at a certain point in time. Growth is where you invest in equities in the first place and should be where you exclude the rubbish.

   

Contact US

CANADA
  • David Zanutto

    Email

    +1 403 476 3269

EUROPE
  • Phil Edwards

    Email

    +44 117 988 7548

PACIFIC
  • Hendrie Koster

    Email

    +61 2 8864 6306

UNITED STATES
  • Anthony Brown

    Email

    +1 314 982 5741