Canadian financial advisors are seeking out smart beta indices for better diversification and yield, according to a recent survey from London, England-based index provider FTSE Russell.

For the study, 81 advisors in Canada were surveyed on how and why they employ smart beta index-based products. In turn, 31% said they look to these products for improved diversification and 30% said for increasing yield.

Reasons typically associated with the use of index-based investment approaches — such as transparency, cost and tax efficiency — ranked lower, at 24%, 21% and 18%, respectively.

“We’re seeing smart beta gain more widespread acceptance among advisors in Canada,” says Marina Mets, managing director of fixed-income with FTSE Russell in Toronto, in a statement. “And, as shown in our latest research, these advisors are using a variety of innovative new index-based investment products to pursue a broad range of investment objectives. Yield enhanced fixed-income smart beta indices are just one of the many new and exciting index solutions helping Canadian advisors and their clients.”

The study revealed that enthusiasm for smart beta indices is continuing to grow. Approximately 57% of advisors in Canada plan to increase usage of smart beta strategies within the next year or two, the report says.

The reason Canadian advisors can be slow to use smart beta indices, the report adds, is because almost half (47%) feel they lack the required knowledge.