Strategic beta assets pile up

Investors favour safety and dividend income.

Christopher Davis 15 November, 2016 | 6:00PM

After launching a raft of strategic-beta ETFs in recent years, Canadian asset managers slowed the pace over the 12 months to the end of September 2016. The number of such offerings rose by seven to 96 (excluding multiple share classes of a single ETF).

Assets rose at a brisk pace, increasing 26% from $9.6 billion to $12.1 billion, compared with 15% over the prior 12-month period. Weak stock market performance, especially in Canada, meant inflows drove growth. Indeed, approximately $1.5 billion flowed into strategic-beta ETFs over the period. Overall, strategic-beta ETFs' share of the nearly $107 billion ETF market held steady at 11%.

While strategic-beta's share of the overall market changed little over the past year, it's up from 7.5% five years ago thanks to strong investor interest. Over the period, these assets rose $9 billion, $5.7 billion of which stemmed from inflows. In all, strategic-beta assets rose 31% annually over the period, modestly higher than the 21% growth rate for ETFs overall.

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Christopher Davis

Christopher Davis  Christopher Davis is Director of Manager Research at Morningstar Canada.