The Rise of Multi-factor Smart Beta ETFs

Multi-factor ETFs are marketed as a way of improving investor return profile by addressing the risks inherent to single-factor smart beta funds

Ben Johnson 22 September, 2017 | 10:53AM
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The European strategic-beta ETP market has continued to experience strong growth, with assets under management up by 38% to a new high of $56.2 billion in the 12 months to June 2017. The bulk of these gains have been driven by a largely uninterrupted stream of positive inflows, amounting to $10.1 billion. Strategic-beta ETPs have continued to claim market share from their more mainstream peers.

Dividend  strategies remain the most popular, thanks to the ultra-low interest rate environment

In the 12 months to the end of June 2017, strategic-beta ETPs’ market share increased to 8.1% from 7.6% as of end-June 2016, further extending the steady positive growth trend observed since 2009. While dividend weighted ETFs retain the lion’s share of overall assets invested in strategic-beta ETPs, multi-factor ETFs are fast becoming a key growth segment.

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Ben Johnson

Ben Johnson  is director of passive funds research at Morningstar.