Investors Search for Smart Beta Strategies in 2017

Retail investors and financial advisors have contributed to the first leg of the ETF industry’s growth spurt, and institutional investors could support ETF growth ahead.

According to a recent FTSE Russell smart beta survey, global institutional asset owners currently evaluating smart beta have doubled to 36% in 2016 from 15% at the first survey in 2014, and 62% of asset owners with an existing smart beta position are now considering additional allocations.

Close to 70% of asset owners also take a long view on smart beta, planning to utilize smart-beta options five years or longer to achieve their long-term investment objectives. The rising adoption reflects asset owners’ preference for return enhancement and risk reduction.

The smart beta survey of global asset owners also revealed a developing trend in asset owners’ views and usage of smart beta strategies. The percentage of asset owners that tracking five or more smart beta indices have increased significantly to 21% in 2016 from 2% in 2014.

Due to the increased usage of smart-beta strategies, we are also witnessing traditional open-end active fund managers tiptoe into the ETF industry with smart-beta options of their own.

Financial advisors who are interested in learning more about CFP/CIMA accredited panels on the online conference can register for the February 8, 2017 ETF Trends Virtual Summit.