Press Release - Boston, London, Nice, Paris, Singapore, Tokyo, June 21, 2021
Scientific Beta releases new inflation-friendly indices
Equity inflation indices are Scientific Beta’s first suite of macroeconomic factor indices
Scientific Beta has announced the release of inflation-friendly indices, the Scientific Beta US Inflation indices, its first suite of macroeconomic factor indices. The inflation indices provide long-term equity performance with additional inflation protection compared to a traditional cap-weighted equity index.
These indices correspond to a genuinely important subject for institutional investment, because in the event of inflation they procure a higher asset value (surplus) that could offset the impact of inflation on the revenue needs of future pensioners.
This capacity to produce strong conditional performance does not result in a high level of tracking error with respect to the cap-weighted benchmark, like with many indices, and ultimately in poor unconditional performance. Indeed, through their sound diversification, the Scientific Beta US Inflation + indices also deliver a satisfactory return for the equity risk taken over the long term. This distinguishes the strategy from other strategies that may have interesting conditional properties, but have disappointing Sharpe ratios over the long term, as is the case for sector strategies like financials or REITS. Moreover, it should be noted that REITS or commodities do not have particular qualities to protect investors against inflation surprises.
On the occasion of the launch of the Scientific Beta US Inflation indices, Dr Noël Amenc, CEO of Scientific Beta, declared, "It is important to recall that it is unexpected inflation (and not the level of inflation or expected inflation) that pose a problem for investors in risky assets, because these surprises have not yet been priced. It is clear, and this can be observed over the whole sample and to an even greater degree in the first half of 2021, that inflation surprises have a strong and contrasted impact on the performance of equities. With more than 3% accumulated outperformance since the beginning of the year, our Scientific Beta US Inflation + indices have been able to protect the equity investment against this unexpected increase in inflation."
More information on these indices can be found through the link below:
Scientific Beta Macro-Tilted Equity Indices
About Scientific Beta:
Scientific Beta aims to be the first provider of a smart factor and ESG/climate index platform to help investors understand and invest in advanced factor and ESG/climate equity strategies. Established by EDHEC-Risk Institute, one of the top academic institutions in the field of fundamental and applied research for the investment industry, Scientific Beta shares the same concern for scientific rigour and veracity, which it applies to all the services that it offers investors and asset managers.
On January 31, 2020, Singapore Exchange (SGX) acquired a majority stake in Scientific Beta. SGX is maintaining the strong collaboration with EDHEC Business School, and principles of independent, empirical-based academic research, that have benefited Scientific Beta’s development to date. Since 2015, Scientific Beta has also been offering highly advanced strategies in the area of ESG and climate change, whether involving options integrated into smart beta indices or pure ESG or climate benchmarks.
As a complement to its own research, Scientific Beta supports an important research initiative developed by EDHEC on ESG and climate investing and cooperates with V.E and ISS ESG for the construction of its ESG and climate indices.
Scientific Beta, 1 George Street, #15-02, Singapore 049145. For further information, please contact: contact@scientificbeta.com, Web: www.scientificbeta.com.