The rise of smart beta has just got another boost thanks to a study commissioned by Norway’s ministry of finance for its Government Pension Fund Global. It asked index provider MSCI to look into the feasibility of running smart beta strategies for large portfolios. Very few institutions with the size of GPFG’s $400-billion equity portfolio have implemented smart beta strategies yet, mostly because of challenges around investability or liquidity. MSCI, which has around $40 billion benchmarked against its various risk premia, or smart beta, indicies, explored the feasibility of investing a hypothetical portfolio of $100 billion and found that large assets can successfully run on these indices without liquidity worries.
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