Smart beta asset flows outpacing traditional ETFs

Nov 26th, 2015 | By | Category: ETF and Index News

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Smart beta equity exchange-traded funds gathered $3.0bn in new assets globally during October, bringing the year-to-date total to $53.7bn, according to a new report from ETF industry consultants ETFGI.

Smart beta asset flows are significantly outpacing traditional ETFs

The popularity of smart beta ETFs is reflected in their 39.3% compound annual AUM growth rate over the past five years.

Total assets under management (AUM) for smart beta ETFs now stand at $399bn.

“Our findings show that market cap equity ETFs are still the most popular based on AUM where they accounting for $1.79tn. But when compared on their five-year compound annual growth rates, smart beta equity products are growing significantly faster at 39.3% while market cap has been growing at 18.6%,” said Deborah Fuhr, Managing Partner at ETFGI.

The most popular smart beta strategies being employed by investors are those which use fundamental factors, such as dividend yield, in their index methodologies. $286.6bn in assets across 401 funds currently track indices which use fundamental factors in their screening process. Multi-factor products which combine factors, such as value, with others such as momentum and volatility account for $26.7bn of AUM across 144 funds.

ETFs which are categorised as smart beta based only on the fact that the index uses an alternative weighting methodology (i.e. anything other than market capitalisation weighted) have $22.7bn in assets (84 products), while those utilising volatility screens such as filtering for securities with low volatility have 63 products and $26.4bn assets. There were also 28 products based on momentum strategies accounting for $10.6bn assets.

Year-to-date, 148 new smart beta equity ETFs were launched by 48 providers across 33 index providers in 17 countries, while 16 products were delisted from 8 different providers.

iShares gathered the largest smart beta net inflows in October with $1.6bn, followed by Guggenheim Investments with $361m and Charles Schwab Investment Management with $352m net inflows.

So far this year, WisdomTree Investments has gathered the largest net inflows with $20.0bn, followed by iShares with $13.4bn and Vanguard with $6.4bn net inflows.

Looking at smart beta asset flows by index provider, products tracking S&P Dow Jones indices gathered the largest net inflows in October with $1.1bn, followed by MSCI with $814m and Cohen & Steers with $425m net inflows.

Year-to-date, WisdomTree Indexes, the proprietary in-house indices behind the WisdomTree ETF line-up, gathered the largest net ETF inflows with $20.0bn, followed by MSCI with $9.4bn and CRSP with $7.3bn net inflows.

There were 764 smart beta equity ETFs, with 1,336 listings, from 106 providers listed on 31 exchanges in 27 countries.

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