Get smart with smart beta
Globally, smart beta is one of the fastest growing investment strategies in the asset management industry. At the forefront of this growth are smart beta exchanged traded funds (ETFs) which reached a new record high of US$429 billion in June 20161. Smart beta ETFs are quickly gaining traction with Australian investors. In June, VanEck embarked upon Australia’s first survey on the use and perceptions of smart beta by financial advisers and brokers and released the results today.
1Source: ETFGI, August 2016
Over the past five years the number of smart beta ETFs listed on the ASX has increased from 5 to 29. In 2011 there was $250 million invested in smart beta strategies that predominately focused on equity income. Today there are a number of different smart beta strategies which total in excess of $2.1 billion. This equates to a 1,300% increase in five years.
The adoption of smart beta strategies in Australia is mirroring global growth as investors realise the benefits of combining the best aspects of active and passive portfolio construction techniques. Investors in smart beta ETFs also benefit from transparency, low cost, liquidity and ease of trading on ASX.
VanEck’s 2016 Smart Beta Survey reveals that one third of Australian financial advisers and brokers are already using smart beta strategies in their portfolios with that number set to grow. Those not using smart beta mostly cited not knowing enough about it as their reason for not investing, however advisers believe that smart beta strategies will become more prevalent in portfolios in the future.
Other key takeaways of the survey include:
- Over 80% of Australian financial advisers and stock brokers are familiar with smart beta;
- Smart beta strategies are viewed positively for their outperformance;
- 89% of financial advisers and brokers believe smart beta will perform in line or outperform active management;
- 100% of respondents who currently use smart beta ETFs are happy with their performance;
- Equal weight followed by factor/multi-factor are the most popular smart beta strategies.
To help investors capitalise on the benefits of smart beta ETFs we have launched a smart beta microsite. Click here to access.
We invite you to have a look around and discover the advantages of utilising smart beta as a part of your portfolios.