LONDON: Paris-based money manager TOBAM has raised $2.1 billion under its "anti-benchmark" funds in the last three months, it said on Monday, boosting assets under management to $8.7 billion.
"Anti-benchmark" or smart beta funds, the fastest growing segment of the exchange traded fund market (ETF), weigh holdings by criteria other than market capitalisation and are typically created via algorithms designed to cherry pick winning stocks.
They are cheaper to invest in than a typical actively managed fund and have become a magnet for investor dollars, pulling in 60 cents of every dollar flowing into ETFs in the US over the two years to the end of 2014, Morningstar.
TOBAM has seen net inflows worth $2.6 billion since the start of 2014, it said, raising money from more than 20 institutional investors as they look for newer and cheaper ways to outperform their benchmarks and diversify portfolios.
While a classic index fund attempts to capture beta, or market return, by holding all shares in proportion to their market capitalised weight, smart beta funds try to beat the market by making adjustments.
Those adjustments are based on 'factors,' anomalies, like for example the outperformance of stocks with certain characteristics such as their small size, which managers hope will persist.
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