Smart beta on the up

Smart beta equity ETFs/ETPs (exchange-traded funds/products) listed globally gathered $3.0 billion in new assets in October and $53.7 billion in the first 10 months of 2015, according to ETFGI’s new report the Global Smart Beta ETF and ETP Insights report for October 2015. There were 764 smart beta equity ETFs/ETPs, with 1,336 listings, assets of $399 billion, from 106 providers listed on 31 exchanges in 27 countries, it says.

In terms of the factors used by indices in their methodologies which smart beta products track, 401 products with $286.6 billion track indices which use fundamental factors in their screening process such as dividend yield, earnings per share, revenue or other accounting metrics, while 144 products with $26.8 billion assets follow indices with multiple types of factors in their screening process which could include fundamental as well as other factors such as volatility, momentum or where the securities are weighted by a measure other than market cap (those which use an ‘alternative weighting’).

Products which are categorised as smart beta based only on the fact that the index uses an alternative weighting methodology have $22.7 billion assets across 84 products, while those utilising volatility screens such as filtering for securities with low volatility have 63 products and $26.5 billion assets. There were also 28 products based on momentum strategies with $10.6 billion assets.

Says Deborah Fuhr, managing partner ETFGI,: “Our findings show that market cap equity ETFs/ETPs are still the most popular based on assets under management where they account for $1.79 trillion, compared to $399.3 billion invested in smart beta equity ETFs/ETPs. But when compared on their 5 year CAGR rates, smart beta equity products are growing significantly faster at 39.3 percent while market cap has been growing at 18.6 percent.”

Year to date (YTD), 148 new smart beta equity ETFs/ETPs 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 ETF/ETP net inflows in October with $1.6 billion, followed by Guggenheim Investments with $361 million and Charles Schwab Investment Management with $352 million net inflows.

YTD, WisdomTree Investments gathered the largest smart beta ETF/ETP net inflows with $20.0 billion, followed by iShares with $13.4 billion and Vanguard with $6.4 billion net inflows.

Products tracking S&P Dow Jones smart beta indices gathered the largest net ETF/ETP inflows in October with $1.1 billion, followed by MSCI with $814 million and Cohen & Steers with $425 million net inflows.

YTD, WisdomTree smart beta benchmarked products gathered the largest net ETF/ETP inflows with $20.0 billion, followed by MSCI with $9.4 billion and CRSP with $7.3 billion net inflows.