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Strategic beta ETP inflows hit new record – Morningstar

The Chicago-headquartered firm noted that the growth was largely driven by Taiwan and Australia.
Chinese AMs see net outflows in Q1

Last year witnessed the biggest annual net inflows into strategic beta exchange-traded products (ETPs) in Asia Pacific history, according to Morningstar research.

The Chicago-headquartered firm said that net inflows reached $9.8bn last year, although this belied a varied performance across different markets.

Strategic beta is an alternative to traditional passive investing in which funds track indices using criteria other than a company’s or issuer’s size.

Australia and Taiwan dominated in terms of net inflows, accounting for 95% of the region’s net flows last year.

Taiwan, in particular, had a stellar year, leapfrogging Australia into second place in terms of total assets. Its strategic beta ETP market recorded a growth rate of 110%, lifting assets to $12.4bn.

In spite of being leapfrogged, Australia clocked a 16% growth rate, with strategic beta assets reaching $9.1bn.

Japan, which is by far the largest strategic beta market in the region, recorded annual net outflows for the first time since Morningstar started reporting on the data.

Overall, Japan recorded $24.3bn in assets last year.

Morningstar noted that Japan had accounted for a large share of the growth of strategic beta ETPs in Apac in recent years due to the Bank of Japan’s ETF purchases, although these came to a halt in April 2021.

Meanwhile, Morningstar noted that as of the end of last year, sustainable strategic beta ETPs accounted for 9.2% of total assets, higher than the 8.5% figure in Europe. Morningstar noted that this was skewed by one product, the Cathay Sustainability High Dividend ETF.

Part of the Mark Allen Group.