Pros Expect Smart Beta ETF Wave To Keep Swelling


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ETF.com's "Inside ETFs" conference took place in Florida last week and, perhaps not surprisingly, smart beta exchange-traded funds were popular topics of discussion. That stands to reason as various surveys and studies out last indicated professional investors are likely to continue boosting their usage of smart beta ETFs.

According to FTSE Russell’s first U.S. retail financial advisor market survey – Smart Beta: 2015 survey findings from U.S. financial advisors – 68 percent of financial advisors polled are using smart beta ETFs and 70 percent are using multiple strategic beta approaches.

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Strategic Beta ETFs

A recent survey by Create-Research found that smart beta ETFs account for over $300 billion, or 18 percent of the U.S. ETF market— by far the largest ETF market in the world.

“Smart Beta equity ETFs/ETPs listed globally gathered US$ 3.0 billion in new assets in October and US$ 53.7 billion in the first 10 months of 2015. There were 764 smart beta equity ETFs/ETPs, with 1,336 listings, assets of US$399 billion, from 106 providers listed on 31 exchanges in 27 countries, according to ETFGI’s new report the Global Smart Beta ETF and ETP Insights report for October 2015,” according to ETFGI, a London-based ETF research firm.


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USMV

With 2016 off to a volatile start, low volatility ETFs, which fly under the smart beta banner, could help drive further smart beta asset growth. That includes the iShares MSCI USA Minimum Volatility ETF (iShares Trust (NYSE: USMV)), which added over $3 billion in new assets last year and is off to a fast start this year.

“Daniel Gamba, managing director and head of BlackRock's iShares Americas Institutional Business, highlighted how institutional investors were increasingly looking at his firm's single factor products, tied to low volatility, quality, momentum, and size,” according to a new research note by S&P Capital IQ.

XRLV

The PowerShares S&P 500 ex-Rate Sensitive Low Volatility Portfolio (NYSE: XRLV) is another example of a smart beta that could see increased popularity. Now home to over $108 million in assets under management, XRLV is home to 100 S&P 500 stocks that are quality as low volatility and not sensitive to changes in interest rates. Financial services and industrial stocks combine for over 48 percent of XRLV's weight.

“With so many different smart-beta products now available for investors to sort through, S&P Capital IQ thinks understanding what's inside is particularly important. Since ETFs track different indices, the exposures they provide, along with their returns will be different,” added S&P Capital IQ.

XRLV does not allocate more than 1.35 percent to any of its holdings. Its roster includes familiar low volatility fare such as Dow components The Coca-Cola Co (NYSE: KO), Verizon Communications Inc. (NYSE: VZ) and Procter & Gamble Co (NYSE: PG).

Image Credit: Public Domain

Crypto Whales Are Loading Up — Are You?

New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.


Posted In: Long IdeasNewsBroad U.S. Equity ETFsSpecialty ETFsIntraday UpdateMarketsTrading IdeasETFsBlackrockDaniel GambaETF.comETFGIFTSE RussellisharesS&P Capital IQsmart betaSmart beta ETFs