Combining market moves and net inflows, smart beta equity ETF/ETP assets have increased by 18.3% from US$532.79 billion to US$630.39 billion, with a 5-year CAGR of 31.5%.
At the end of August 2017, there were 1,279 smart beta equity ETFs/ETPs, with 2,171 listings, assets of US$630 billion from 158 providers on 40 exchanges in 33 countries.
About 88.7% of Smart Beta assets are invested in the 631 ETFs/ETPs that are domiciled and listed in the United States and 76.2% of the assets are invested in the 507 ETFs/ETPs that provide Smart Beta exposure to the US market.
Jillian DelSignore, Executive Director, Head of ETF Distribution J.P. Morgan, said factor based investing has been around for decades, but the ETF vehicle has helped democratize that access to all investors.
“Factor based ETFs can allow investors to gain exposure to risk premia shown to outperform over time — for example, value, size, momentum,” DelSignore said. “Multi factor ETFs provide exposure across a number of those factors helping to provide a more diversified core of a portfolio.”
For example, the JPMorgan Diversified Return International Equity ETF (NYSEArca: JPIN), has grown to over a $1 billion in assets in just under three years.
Del Signore said JPIN is often used as a compliment to market cap weighted ETFs to help provide a smoother ride in an asset class that can tend to be more volatile — a way to help advisors keep their clients invested.
iShares gathered the largest ‘smart beta’ ETF/ETP net inflows in August with US$1.66 billion, followed by DeltaShares with US$793 million and Vanguard with US$707 million net inflows.
Products tracking MSCI ‘smart beta’ indices gathered the largest net ETF/ETP inflows in August with US$2.03 billion, followed by CRSP with US$646 million and FTSE Russell with US$367 million net inflows.
For more on Smart Beta ETFs, visit the Smart Beta Channel home page.