“In order for ETF providers to meet the needs of their clients in 2014, they will have to listen to their clients’ challenges and involve them more in the product development process in order to effectively deliver client-led solutions. iShares, for example, partnered with institutional and advisor clients in 2013 to develop iShares MSCI Factor ETFs and Enhanced ETFs based on their desire for exposure to factors such as value, size, quality and momentum. The positive feedback from the clients is leading iShares to find other similar opportunities in 2014,” according to iShares.
Additionally, iShares sees advisors and investors boosting their usage of smart ETFs. Last year, smart beta ETFs attracted $65.1 billion in new assets, nearly double the $34.2 billion hauled in by the group in 2012. [A Record Year of ETF Inflows]
“iShares expects the interest in non-market cap weighted ETFs such as factor ETFs or minimum-volatility ETFs to continue in 2014. We believe factor and minimum-volatility ETFs will see above-market asset growth given broader acceptance from global pension plans, government institutions, asset managers and registered investment advisors,” said iShares.
Popular iShares smart beta ETFs include the iShares MSCI USA Minimum Volatility ETF (NYSEArca: USMV) and the iShares MSCI USA Quality Factor ETF (NYSEArca: QUAL).