Lyxor ETF Barometer – European Smart Beta ETF Market Trends

European Smart Beta ETF market flows continued to be strong in Q1 2016. Net New Assets (NNA) year to date (until 31/03/2016) amounted to EUR2bn…..

Marlène Hassine – Head of ETF Research – Lyxor ETF

Lyxor Etf Barometer Q1 2016 in brief

Total Assets under Management are up 4% vs. the end of 2015, reaching EUR 16.7 billion*. Smart Beta assets have doubled since the end of 2014. Year to date, ETF flows were sustained especially in the Risk based & Factor allocation categories as investors looked for defensive strategies and alternative sources of return in an uncertain environment.

Smart Beta definition: smart beta indices are rules-based investment strategies that do not rely on market capitalization. To classify all the products that are included in this category we have used 3 sub segments. first, risk based strategies based on volatility, and other quantitative methods. secondly, fundamental strategies based on the economic footprint of a firm – through accounting ratios- or of a state – through macroeconomic measures. Then factor strategies including homogeneous ranges of single factor products, and multifactor products designed for the purpose of factor allocation.

Q1 2016 flows were positive for Smart Beta ETFs at EUR2BN, with a oneyear record high at EUR907M in February 2016, and a strong month of March at EUR807M. The quarterly figure is equal to the amount gathered in Q1 2015, in a context where equity ETFs globally registered significant outflows. Year to date, risk based ETFs registered the highest inflows with a record high on Minimum volatility ETFs at EUR1.2BN. due to high uncertainties on the economic and monetary environment worldwide, low volatility ETFs continued to attract significant interest especially on US and global indices. in the factor allocation space, multifactor ETFs continued to gather inflows, EUR357M year to date, mainly on European indices as investors are looking for diversification in a context of poor equity market performance. In the fundamental space, quality income ETFs benefited from the low yield environment due to their attractive yield / risk profile.

*Including ETFs on indices weighed by yield



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