Strategic beta ETP shows solid growth despite falling AUD: Morningstar
Australia's strategic beta exchange-traded product (ETP) market is on the rise despite the weakness of the Australian dollar, research revealed.
Morningstar's report, ‘A Global Guide to Strategic-Beta Exchange-Traded Products', found the strategic beta market was a fast-growing class of investment products on the active-to-passive investment spectrum, with seven strategic ETPs launching in Australia over last 12 months, as of June 30 this year.
According to the report, Australian strategic beta ETP assets grew by a modest 6.1 per cent in US dollar terms over the last 12 months, however measured in local currency, growth remained rapid at 30.2 per cent. With a total of 124 ETPs now in Australia, 16 of them are classified as strategic beta.
These 16 account for $1.2 billion, which is 8.2 per cent of Australia's $14.1 billion ETP market which, according to the report, continues to be a major factor in strategic beta's growth.
Morningstar's director of global exchange-traded fund research, Ben Johnson, said as strategic beta strategies continue to proliferate and become "increasingly nuanced", investors' due diligence burden will grow "commensurately".
"The strategic beta landscape is growing faster than both the broader ETP market as well as the global asset management industry, driven by new inflows, new product launches, and the entrance of new providers during the past year," Johnson said.
"Benchmarks underlying new products are more complex as well."
The report found the majority of Australian strategic beta ETPs continued to be invested primarily in domestic equities, despite the number of global equities vehicles increasing from one to five over the past year.
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