As more and more investors lose faith in active managers, they are increasingly turning to a compelling alternative – smart beta. Combining elements of both active and passive management, smart beta strategies have enjoyed significant inflows in the past few years and continue to see growing interest from investors. The latest evidence for this comes from FTSE, a global index provider, which has announced that assets under management in ETFs linked to the fundamentally weighted FTSE RAFI index series have topped $5 billion.
‘ MSCI ’
For providers of exchange-traded products (ETPs), 2013 is fast becoming a vintage year. Year-to-date net inflows reached a record $107 billion through the end of May 2013, a whopping 31% higher than the $82 billion seen during the same period last year, according to data from ETFGI. When added to the existing ETP pile, total assets under management in the industry now stand at an all-time high of $2.14 trillion across some 4,849 products from more than 200 providers.
By David Stevenson – I’m fairly sure that readers of ETF Strategy are an intelligent bunch who know one end of a bad index from another, but even intelligent people make intelligent mistakes (I should know!). My big worry is that investors in ETFs don’t always understand what’s going on in their index. I worry that we spend an inordinate amount of time researching the asset class opportunity and a disproportionately small amount of time researching the index.
MSCI, one of the world’s largest providers of indices to exchange-traded funds (ETFs), has introduced the MSCI China A High Dividend Yield (HDY) Index, a new index measuring the performance of high yielding China A-shares. The new index includes stocks with a track record of sustainable and consistent dividend payouts and dividend growth, and is designed to serve as a benchmark for investors targeting the high-dividend yielding domestic China opportunity set or as the basis for index-linked financial products such as ETFs.
By David Stevenson – Why are so few investors currently buying into consumer staples sector ETFs? I realise that this isn’t exactly one of those raging questions that ranks up there alongside “should we dump Europe?” and “why, oh, why are most of the singers on The Voice so bloody awful?”, but for investors I think the question really, really matters. To understand why I’m so nonplussed, let’s rewind the investment debate and establish some basic principles. The first and most basic principle is that investors worldwide are fearful about macro risk.
Global inflows into exchange-traded products (ETPs) slowed a little in April 2013 to $10.3 billion, according to the latest ETP Landscape report from BlackRock. However, as of April month end, ETPs have seen inflows of $79.9 billion in the year to date, which is more than $13 billion ahead of the $66.3 billion of inflows collected during the same period last year. This is despite a major setback for gold ETPs, which have been hit with outflows of almost $18 billion.
The pioneering S&P 500 Equal Weight Index (EWI) and Guggenheim S&P 500 Equal Weight ETF (RSP) have marked their tenth anniversaries. Prior to their launch, the overwhelming majority of indices and ETFs were weighted by market capitalisation. And while market capitalisation weightings still dominate today, alternatively weighted approaches are becoming increasingly popular.
BSE, formerly known as the Bombay Stock Exchange, and S&P Dow Jones Indices, a leading index provider, have announced the launch of the S&P BSE 500 Shariah Index. The new index measures the performance of all Shariah-compliant stocks within the broad-based S&P BSE 500 Index. The index is the first to be launched out of a strategic partnership formed between the two companies in February of this year.
As the search for yield goes international, S&P Dow Jones Indices has announced that its S&P Pan Asia Dividend Aristocrats Index has been licensed to SSgA’s SPDR ETFs division for the launch of an exchange-traded fund (ETF) based on the index. Part of the popular ‘Dividend Aristocrats’ suite, the index measures the performance of the highest yielding Pan Asian companies that have followed a managed-dividends policy of increasing dividends for at least seven consecutive years. It includes constituents from both developed and emerging markets.
Exchange-traded funds (ETFs) linked to frontier markets, such as the db X-trackers S&P Select Frontier UCITS ETF, present an enticing proposition for investors. Inherently a long-term investment opportunity, they not only offer potential for strong returns, but also provide an ideal means of portfolio diversification. With 22% of the world’s population, of which almost 60% is under 30 years of age, abundant natural resources and low labour costs, frontier markets are “too significant to ignore”, says Tim Drinkall of Morgan Stanley Investment Management.