Markets

Smart Beta ETF Adoption by Region

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In a previous article in October 2016, we defined and sized the global smart beta ETF market as $347B. That total increased to $355B as of year-end 2016, about 10% of global ETFs assets.

In this article we examine smart beta ETF adoption by listing region. The chart below summarizes the rate of smart beta ETF adoption by their primary region of listing.

Source: First Bridge Data; as of Dec 2016

  • The US, Canada and Australia have the highest rates of smart beta adoption, with above 10% of total ETF assets in smart beta strategies.

  • Europe has a total smart beta adoption rate of 7%, with Latin America at 5% and Africa and Asia are at 2%. (Note that Leveraged & Inverse ETFs are grouped in the ‘Other’ category).

The table below lists the top 5 largest ETFs for 3 different regions.

Table: Top 5 Smart Beta ETFs in US, Canada & Europe

Sponsor ETF Assets ($M, Dec 2016)
US
Vanguard Vanguard Dividend Appreciation ETF (VIG) $22,364
Vanguard Vanguard High Dividend Yield ETF (VYM) $17,606
Blackrock iShares Select Dividend ETF (DVY) $16,893
State Street SPDR S&P Dividend ETF (SDY) $14,959
Blackrock iShares Edge MSCI Min Vol USA ETF (USMV) $12,282
Europe
State Street SPDR S&P US Dividend Aristocrats UCITS ETF (SPYD:GR) $2,664
Blackrock iShares Edge MSCI World Minimum Volatility UCITS ETF (MVOL:LN) $1,419
Blackrock iShares STOXX Global Select Dividend 100 UCITS ETF (SDGPEX:GR) $1,184
Blackrock iShares Edge S&P 500 Minimum Volatility UCITS ETF (SPMV:LN) $1,145
State Street SPDR S&P Euro Dividend Aristocrats UCITS ETF (SPYW:GR) $1,132
Canada
BMO BMO Laddered Preferred Share Index ETF (ZPR:CN) $1,197
Blackrock iShares Dow Jones Canada Select Dividend Index Fund (XDV:CN) $1,134
Blackrock iShares S&P/TSX Canadian Dividend Aristocrats Index Fund (CDZ:CN) $799
Invesco Powershares PowerShares 1-5 Year Laddered Investment Grade Corporate Bond Index ETF(PSB:CN) $580
Blackrock iShares S&P US Dividend Growers Index Fund CAD (CUD:CN) $497

Data Source: First Bridge Data; Assets as of Dec 31, 2016

  • In the US, dividend ETFs account for almost 50% of all smart beta equity ETFs and the 4 largest smart beta ETFs. The 5th largest is a minimum volatility ETF, where the ETF constituent holdings are selected and weighted to hold securities with low historical volatility.

  • In Canada, laddered bond ETFs (classified as smart beta in the First Bridge smart beta definitions framework) have gathered significant assets and are part of the top 5 smart beta ETFs in that region.

While the US and Canada have the highest smart adoption to date, 2017 is likely to be the year where smart beta ETFs may also become more popular in Europe and Asia.

Aniket Ullal is the founder and CEO of First Bridge Data, a provider of independent ETF data and analyticsto institutional clients. First Bridge is not affiliated with any ETF sponsor and does not promote or distribute any ETF products.

This article should not be considered investment advice. Both the author and First Bridge Data LLC shall not be liable for any actions or decisions made based on the information provided in this article. First Bridge Data LLC is not a registered investment advisor or broker, and does not recommend specific securities, funds, or investment strategies, nor does it advocate the purchase or sale of any individual investment vehicle.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Aniket Ullal

Aniket Ullal is head of ETF data and analytics for CFRA, one of the world's leading independent investment research firms. Previously he was the founder and CEO of First Bridge Data, which was acquired by CFRA in August 2019. Prior to starting First Bridge, he had product management responsibility for S&P’s US indices, including the widely followed S&P 500 and S&P/Case-Shiller indices. These indices have over $1 Trillion in ETF assets tracking them. He is the author of 'ETF Investment Strategies' (McGraw-Hill; 2013).

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