While the definition “smart beta” can vary, one definition is that a smart beta fund, for example, tracks a style index or uses a mechanical investing strategy to obtain the returns associated with a particular strategy without the cost of active management. One example might be an index tracking returns obtained by value investing.

Invesco’s research says that by 2017, the percentage of assets put in to smart beta products in Europe is expected to be 18 per cent of total allocation, double the amount at present. Respondents based in Germany, Italy and Switzerland expect at least a 100 per cent increase in allocations, with respondents based in the UK (which leads the four markets in terms of current allocations) expecting an increase of just under 70 per cent from 15 per cent at the beginning of 2014 to 25 per cent by 2017.

The research, that targeted traditional market cap weighted index and smart beta index users in the aforementioned four markets, highlighted a strong appetite for smart beta strategies going forward, with 56 per cent of respondents saying they would consider investing more in these strategies, said.

In 2013, smart beta ETFs captured nearly a third of industry inflows and contributed a record $65.1 billion of inflows globally, which more than doubled the figure for the previous year. The European market in smart beta ETFs has also more than doubled in 2014, expanding from €2.1 billion ($2.58 bullion) to €4.6 billion between January and September 2014.

Such strategies are being used increasingly to run alongside actives strategies; almost a third of respondents to the Invesco report (30 per cent) said they will become mainstream.

Fieldwork for this report was conducted by NMG’s consulting practice between 27 January and 21 March 2014, covering 112 interviewees.