The demand for smart beta among pension funds and other institutional investors is skyrocketing, with no end in sight, according to Towers Watson. 

Investors traditionally have pursued alpha, which is the measurement of a portfolio manager's performance. But more nowadays are pursuing smart beta, too, which aims for better returns at indexlike prices using measures other than the standard market-cap weighting, such as dividends or volatility. And now it would seem that alpha is increasingly taking a back seat. 

Towers Watson's institutional clients globally allocated over $8 billion to smart beta strategies in 2014, the firm said Monday. For the 550 portfolios in question, the firm said, that brought total smart beta strategy exposure up to around $40 billion, across a range of asset classes. 

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