Betashares expands range with systematic ETF
Betashares has announced a new addition to its product suite with a new systematic ETF.
According to the fund manager, the new Betashares Australian Momentum ETF (ASX: MTUM) is the first Australian equities momentum ETF on the ASX and aims to help investors access exposure to a systematic, rules-based momentum investing strategy.
“As a strategy, momentum investing is appealing to a broad range of investors given its performance potential, but it is often difficult to implement due to a range of factors like the time required to manage such a strategy, the identification of outperforming stocks, behavioural bias and execution costs,” Betashares CEO Alex Vynokur said.
“It’s our view that a systematic, rules-based index approach to momentum investing can assist investors to efficiently access the unique return profile of this style factor.”
Momentum investing, as a strategy, involves buying stocks which have outperformed and avoiding or selling those that have underperformed in the recent past, which Betashares flagged as a potentially attractive approach for individual investors who might be challenged to implement such strategies themselves.
MTUM follows a rules-based index to prioritise stocks with strong and consistent momentum, while cutting the worst performers quickly.
MTUM’s index ranks 200 of the largest stocks on the ASX by their 6- and 12-month risk-adjusted returns and selects the top 50 stocks based on those rankings at each selection day. This selection process is repeated every two months.
The final portfolio, Betashares explained, comprises the top 50 stocks selected on each of the last four selection days.
The fund manager noted momentum investing is backed by academic research and has generally worked well across different markets, in Australia and globally, over the long term.
From inception in May 2011 to the end of June 2024, MTUM’s index has outperformed the S&P/ASX 200 Index by around 2.8 per cent per annum, it noted.
“The Betashares Australian Momentum ETF combines the performance potential of momentum investing with the convenience of an ETF,” Vynokur said.
“To that end, MTUM is a complementary addition to our growing range of innovative investment solutions that assist investors and their financial advisers to implement institutional grade strategies within their portfolios.
AUTHOR
Rhea Nath
Recommended for you
There has been a “noticeable uptick” in the use of smart beta ETFs by advisers and sophisticated investors, according to Betashares, who are using the vehicles to take control of their portfolio construction.
The FSC has announced 15 proposals ahead of the federal election which it hopes will increase the competitiveness of Australia’s financial services sector, including six with a focus on fund managers.
Regal Funds Management saw total net inflows of $2.1 billion during 2024, with flows primarily going into long/short equities and multistrategy vehicles.
There is growing divergence between institutional and retail investors in their enthusiasm towards equities, according to Bank of America, with retail sentiment being “unusually low” at the start of 2025.
