AXA Investment Managers Launches SmartBeta Equity Strategy

• Practical Strategy Designed to Harvest Equity Beta Cheaply and Efficiently
• Retains Benefits of Market Cap as a Factor While Reducing Exposure to Wealth-Destroying Elements
• Underscores AXA IM’s Sharpened Focus on the U.S. Market

GREENWICH, Conn.--(BUSINESS WIRE)--AXA Investment Managers (AXA IM) today announced the launch of the AXA IM SmartBeta Equity strategy designed to provide long-term investors with a more efficient way to capture equity market beta while avoiding the limitations of both market cap-weighted indices and alternative weighted schemes.

“Investing in Equity: Smart Beta or Dumb Beta?”

Tim Gardener, Global Head of Consultant Relations, AXA IM, commented, “Most investors are now aware of the pitfalls of market cap-weighted indices. In fact, an industry has sprung up to address these failings. However, we believe that while alternative solutions have made significant strides in overcoming the drawbacks of market capitalization, none have addressed the problems inherent in index tracking. SmartBeta offers a solution to this problem.”

AXA IM’s SmartBeta Equity strategy is designed to retain what is good about market capitalization weightings while reducing the exposure to wealth-destroying elements – namely exposure to poorly compensated risks, lack of diversification, failure to look towards the future and cost leakage.

“By introducing four long-term beta harvesting guidelines, we hope to shift the focus from which index an investor should blindly follow to the production of solutions that harvest equity beta cheaply and efficiently. We believe that our SmartBeta Equity strategy is the viable alternative that investors have been seeking,” added Gardener.

The AXA IM SmartBeta Equity strategy is constructed around the same three building blocks as AXA IM’s SmartBeta Bond strategies. The three elements are:

• Filter: rules-based filters aim to reduce exposure to uncompensated risks;
• Diversify: intelligent diversification aims to avoid concentration risk while managing liquidity; and
• Implement: rebalancing and trading in a way that leverages our experience as investors, while keeping costs low.

“In harvesting beta, a smart investor does not want to take ‘bets’ as an active manager might, although they are persuaded to avoid the pitfalls of blindly tracking an index. The smart investor recognizes that equity investing necessarily involves risk in order to generate returns, but wishes to limit both longer-term loss of wealth and shorter-term downside volatility by avoiding the stocks that are overvalued when markets head south,” explained Gardener.

In designing SmartBeta Equity, AXA IM has leveraged its AXA Rosenberg team’s expertise in engineering and managing quantitative equity strategies. The AXA IM SmartBeta Equity strategy will be managed by a team from AXA Rosenberg and benefits from their experience in constructing and running portfolios that reject market capitalization and target desirable fundamental features. The approach uses proprietary risk filters and leverages AXA Rosenberg’s research and data platform.

The launch of SmartBeta Equity underscores AXA IM’s sharpened focus on the U.S. market, which is part of AXA IM’s strategy to build on its position as a leading fundamental solutions-oriented global asset manager, with offerings in Fixed Income, Equities and Alternatives.

“We are well established in the U.S. through the High Yield team in the Fixed Income arena and AXA Rosenberg in the equity space, with those teams based in the region and serving both the domestic and global markets. We believe that there is a significant opportunity for us to extend our full range of global solutions across the equity, fixed income and alternative spectrum to U.S. investors,” said Xavier Thomin, Head of AXA IM U.S.

The launch of SmartBeta Equity follows the launch of AXA IM’s SmartBeta Credit offering last spring.

Further detail on AXA IM’s SmartBeta strategy is available in the white paper “Investing in Equity: Smart Beta or Dumb Beta?”.

About AXA Investment Managers

AXA Investment Managers is a multi-expert asset management company within the AXA Group, a global leader in financial protection and wealth management. AXA IM is one of the largest European-based asset managers with approximately €548 billion in assets under management as of the end of September 2012. AXA IM employs nearly 2,400 people around the world and operates out of 22 countries. Visit our website: www.axa-im.com

Visit our website: www.axa-im.com