European Smart Beta ETF Market Trends

European Smart Beta ETF market flows continued to be very strong in 2015

Net New Assets (NNA) year to date (until 30/04/2015) amounted to EUR2.2bn, more than half of the 2014 NNA within the first four months of the year. Total Assets under Management are up 45% vs. the end of 2014, reaching EUR 10.4 billion. Smart Beta assets have quadrupled since the end of 2013. Year to date, ETF flows were sustained from all three Smart Beta categories: Risk based, Fundamental and Factor allocation.

• Smart Beta ETFs definition: Smart Beta are rules-based investment strategies that do not rely on market capitalization. To classify all the products that are included in this category we have used 3 sub segments. First, risk based strategies based on volatilities and other quantitative methods. Secondly, fundamental strategies based on the economic footprint of a firm – through accounting ratios- or of a state – through macroeconomic measures. Finally factor strategies including homogeneous ranges of single factor products, and multifactor products designed purposely for factor allocation.
• Year to date, fundamental ETFs have registered the highest inflows with the ETFs on the new fundamentally build benchmark JPX Nikkei 400 gathering most of the assets of the category. In the risk based category, low volatility ETFs continued to see significant inflows benefiting from high valuation levels of developed equity markets. In the factor allocation space, newly launched multifactor ETFs are starting to attract investor interest.

Marlène Hassine – Head of ETF Research – Lyxor ETF
François Millet – Head of Index product development – Lyxor ETF