Smart beta index provider, ERI Scientific Beta, has launched their “pay for what you get” approach to index pricing, to disrupt the traditional fixed fee structure on assets under management (AUM).
Investors who choose the Scientific Beta Multi-Beta Multi-Strategy index from 1 June will pay zero fixed fees, and will only pay variable fees if the option outperforms the reference cap-weighted index.
ERI Scientific Beta chief executive, Noël Amenc, said “our rationale for this mandate offer is that smart beta providers’ claims on the quality and robustness of their strategies should materialise in their live performance”.
“ERI Scientific Beta’s initiative is intended to provide consistency between the smart beta provider’s revenues and the quality of its offering.”
The firm said it was a pure performance fee mandate as part of its investor-friendly approach which has attracted more than US$10 billion in assets under replication for its smart beta indices in three years.
