MSCI reports record surge in demand from ETF providers for smart beta factor indices

Jan 30th, 2015 | By | Category: ETF and Index News

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MSCI, a leading index provider to the ETF industry worldwide, has reported a surge in demand from ETF providers for its “smart beta” factor indices, with almost half of new MSCI index-based ETFs launched in 2014 linked to MSCI factor indices.

MSCI reports record surge in demand from ETF Providers for smart beta factor indices

Baer Pettit, Managing Director and Global Head of MSCI’s Index Business.

Overall, 95 ETFs based on MSCI indices were launched in 2014, almost twice as many as the next index provider, with 42 (45 percent) of these linked to factor indices, compared to six in 2013.

Twelve new ETFs tracking MSCI multi-factor indices, which combine more than one factor, were launched in 2014.

Baer Pettit, Managing Director and Global Head of MSCI’s Index Business, said: “2014 was a year of strong growth in the number of ETFs based on our indexes, in particular our factor indexes.”

He added: “These numbers are evidence that our innovative index offering, combined with the strength of our brand, continue to make MSCI indexes the first choice of ETF providers around the world.”

Certain factors have historically earned a long-term risk premium and represent exposure to systematic sources of risk and return. Factor investing is the investment process that aims to harvest these risk premia through exposure to factors.

MSCI currently calculates indices on six key equity risk premia factors: Value, Low Size, Low Volatility, High Yield, Quality and Momentum.

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