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Scientific Beta and JP Morgan Join to Offer Portfolio Completeness Product

Traders Magazine Online News, October 29, 2019


Scientific Beta and J.P. Morgan announced they will make available a new set of solutions for institutional investors to access single factor indices. The new solutions will combine Scientific Beta’s analytical expertise in the area of single-factor equity solutions in the context of completeness portfolios with J.P. Morgan’s index structuring capabilities which provides its clients with flexible ways to access improved implementation of the portfolio completeness approach.

With the growing popularity of equity smart beta solutions it has become crucial for institutional investors to be able to properly measure factor exposure and diversification at the overall portfolio level. Such analysis should ideally be performed using a unique framework designed with a concern for robustness: using consensual factors, instead of engineering new ones, and measuring exposure through factor betas, instead of using error-prone scoring mechanisms.

Scientific Beta offers its clients free access to factor analytics services aimed at providing a clear diagnosis of a portfolio’s factor exposure and diversification as well as a simple means of improving the portfolio as part of a completeness portfolio made up of long-only and long/short single-factor tilts. To that end, Scientific Beta’s single-factor indices are designed to bring exposure to a desired factor while preserving pre-existing exposures to other factors. This non-destructive design is called the High Factor Intensity filter and equips the full Scientific Beta offering.

“J.P. Morgan has a long history of designing smart beta investment solutions. We are excited to further build out our offering for clients with incremental factor solutions based on the Scientific Beta methodology,” said Arnaud Jobert, Global Head of Investable Index Structuring at J.P. Morgan. “The High Factor Intensity filter can aid investors in adjusting their portfolio within an independent platform while keeping their existing investments unaffected. Such filter will be key in the success when introducing this to investors, most of whom are already smart beta investors.”

“We are delighted to collaborate with J.P. Morgan to provide the building blocks of a new single factor offering”, added Noël Amenc, CEO of Scientific Beta. “As the factor investing market has reached a certain degree of maturity in equities, offering our factor technology together with J.P. Morgan’s implementation capabilities will allow institutional investors to make any necessary completeness adjustments to their existing allocation in a straightforward and practical way.”

About Scientific Beta:

As part of its policy of transferring know-how to the industry, EDHEC-Risk Institute has set up Scientific Beta. Scientific Beta is an original initiative which aims to favour the adoption of the latest advances in smart beta design and implementation by the whole investment industry. Its academic origin provides the foundation for its strategy: offer, in the best economic conditions possible, the smart beta solutions that are most proven scientifically with full transparency of both the methods and the associated risks.

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