Value strategies standout as smart beta ETFs expected to revive in Europe

Value-based smart beta ETFs outperformed traditional strategies in 2022, which experts say is likely to drive a revival in the fortunes of smart beta in Europe.

‘The Cerulli Edge-European Monthly Product Trends’ report said assets under management (AUM) of “fundamental-tilted” funds have been more stable than traditional strategies and that low or negative growth, along with stagnant wages and high inflation, had led to improved conditions for smart beta investing. 

Value was a standout factor in terms of performance and flows, which outperformed market cap-weighted funds in 2022. 

AUM of European smart beta ETFs was €93.7 billion by November 2022, compared to €102.1 billion in December 2021. Total net European inflows into value funds stood at €15.1 billion in October last year, falling just €0.7 billion short of the inflow figure for December 2021, the report said.

Despite performing worse than value, quality strategies could outperform the former in 2023, as they tend to do better during recessions, said Fabrizio Zumbo, European asset and wealth management researcher at Cerulli Associates. 

European smart beta ETF issuers expect the highest growth to be in the UK market in terms of assets over the next 12 to 24 months. 

Managers predicted Switzerland to experience the second highest level of growth after the UK, with Italy anticipated to undergo the least positive activity. 

“Smart beta growth across Europe will depend on how these factor-based strategies perform during the challenges that 2023 brings and whether this performance is enough to attract investor flows,” said Zumbo. 

© 2023 funds europe

HAVE YOU READ?

THOUGHT LEADERSHIP

The tension between urgency and inaction will continue to influence sustainability discussions in 2024, as reflected in the trends report from S&P Global.
FIND OUT MORE
This white paper outlines key challenges impeding the growth of private markets and explores how technological innovation can provide solutions to unlock access to private market funds for a growing…
DOWNLOAD NOW

CLOUD DATA PLATFORMS

Luxembourg is one of the world’s premiere centres for cross-border distribution of investment funds. Read our special regional coverage, coinciding with the annual ALFI European Asset Management Conference.
READ MORE

PRIVATE MARKETS FUND ADMIN REPORT

Private_Markets_Fund_Admin_Report

LATEST PODCAST