Smart beta equity growth outstrips market-cap

BetaSmart beta equity exchange-traded funds (ETFs) are growing at a faster rate than ETFs benchmarked to traditional market-cap indices, research shows.

When measured on a compound annual growth rate (CAGR) basis over five years, smart beta ETFs and other exchange-traded products (ETPs) grew at a rate of 39.3%, while market-cap grew at a rate of 18.6%, according to ETFGI, which researches the ETF market and is based in London.

However, Deborah Fuhr, managing partner at the firm, says market-cap is still the most popular type of ETF.

“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 (€1.68 trillion), compared to $399.3 billion invested in smart beta equity ETFs/ETPs. But when compared on their five-year CAGR rates, smart beta equity products are growing significantly faster…”.

ETFGI research also finds that WisdomTree, iShares and Guggenheim Investments are among the main beneficiaries from the $53.7 billion raised by smart beta ETFs globally this year.

WisdomTree Investments gathered the largest smart beta net flows year-to-date at the end of October with $20 billion, followed by iShares and Vanguard.

iShares gathered the largest net inflow in October with $1.6 billion, followed by Guggenheim Investments with $361 million.

Globally, smart beta ETFs raised $53.7 billion of new money in the first ten months of the year and $3 billion in October.

©2015 funds europe