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.