Trends In Strategic Beta. Alex Prineas, Associate Director, Manager Research, Morningstar Australasia

Transcription

1 Alex Prineas, Associate Director, Manager Research, Morningstar Australasia 1

2 Important Information Any Morningstar ratings/recommendations contained in this presentation are based on the full research report available from Morningstar or your adviser. Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. No part of this document may be reproduced or distributed in any form without the prior written consent of Morningstar. Any general advice or class service have been prepared by Morningstar Australasia Pty Ltd (ABN: , AFSL: ) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement (Australian products) or Investment Statement (New Zealand products) before making any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN ("ASXO"). 2

3 The Backdrop: Australia s ETF Market is Growing Fast, in FUM and Product Launches Total Assets and Number of ETPs in Australia, Dec 2001 to Mar 2017 Number of ETPs Mar FUM A$billions Source: Morningstar Direct, Morningstar ETFInvestor 3

4 Traditional ETFs Growing Fast, But A New Breed of ETPs Are Gaining Momentum Australian ETP Market Growth, March 2010 to March Traditional ETFs, Active ETPs, Strategic Beta ETPs, Other Non-Traditional ETPs. The non-traditional band here includes commodity ETPs, geared, inverse and derivative strategies, currency ETPs, ethical ETFs, and systematic strategies that do not track an index. 4 $30.0b $25.0b Active ETPs 1.08bil Strategic Beta 2.59bil $20.0b Other non-traditional ETPs 2.49 bil $15.0b $10.0b $5.0b Traditional ETP market at 31 Mar 2017: AUD billion $0.0b Source: Morningstar Direct, Morningstar ETFInvestor

5 Strategic Beta is An Example of the Evolution of Active Management The way managed funds used to work: 1. The manager picks some stocks 2. The manager buys the stocks But that has fallen out of fashion because it is active management. The new way managed funds work is: 1. The manager picks some stocks 2. Write the stocks down in a list. 3. Calls the list an index. 4. The manager buys the stocks 5

6 Strategic Beta is An Example of the Evolution of Active Management 6

7 ETP Strategic Beta Growth Not Just a US Story, Not Just an Australian Story Asia-Pacific Strategic Beta ETP Asset Growth USD Billions Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Australia China Hong Kong India Japan Malaysia New Zealand Singapore South Korea Source: Morningstar s Global Guide to Strategic Beta,

8 Dividends Rule in Australia But For How Long? Asia-Pacific Strategic Beta ETPs Ranking by Attribute Source: Morningstar s Global Guide to Strategic Beta,

9 Strategic Beta Product Launches Are Accelerating, and Diversifying Australian ETP Assets, Strategic Beta ETP Assets, and Strategic Beta Product Launches Source: Morningstar s Global Guide to Strategic Beta,

10 Bringing Order To the Disorder Morningstar s Strategic Beta Taxonomy Return-Oriented Dividend Screened/Weighted Value Growth Fundamentals Multi-Factor Size Momentum Buyback/Shareholder Yield Earnings Weighted Quality Expected Returns Revenue Weighted Strategic Beta Risk-Oriented Minimum Volatility/Variance Low/High Beta Risk-Weighted Other Non-Traditional Commodity Equal-Weighted Non-Traditional Fixed Income Multi-Asset 10

11 Morningstar s Global Guide to Strategic Beta ETPs First released in 2014, next edition due in Q3, with data effective as at 30 June