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Strategic beta market expands

11 September 2017 By Jassmyn Goh



The Australia strategic beta market expanded by 60 per cent to US$2.2 billion ($2.9 billion) over the year to 30 June 2017, according to Morningstar.

Morningstar’s fourth annual Global Guide to Strategic Beta Exchange Traded Products (ETP) report found that growth outpaced the overall domestic ETP market, which grew by 34 per cent to US$22.3 billion over the same period.

Strategic beta ETPs now account for 10 per cent of Australia’s total ETP market.

Morningstar Australasia’s director of manager research, Tim Murphy, said: “In Australia, strategic beta exchange traded products achieved another year of strong growth, outpacing the overall domestic ETP market”.

“Assets grew by 60 per cent, over the year to June 2017, and six new strategic beta products were launched over this period, including Australia’s first strategic-beta fixed income ETP,” he said.

“While the opportunity set widens, dividend-screened/weighted products remain the dominant factor used in Australia. Similar trends have been observed on a global scale." 

Six new strategic beta products were launched over the 12 month to 30 June 2017, including Australia’s first strategic beta fixed income ETP, bringing the total number of products available in the Australian market to 27.

Morningstar said dividends remained the dominant factor used in the construction of Australian strategic beta ETPs, and 12 of the 27 strategic beta ETPs in Australia use dividends as a primary screening/weighting factor, which accounted for 65.4 per cent in strategic beta assets.

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