Adoption of Smart Beta ETFs Increasing Among Institutional Asset Managers
24 January 2014 - 3:29AM
Marketwired
Adoption of Smart Beta ETFs Increasing Among Institutional Asset
Managers
Independent Research Reveals Use of Low Volatility & High
Dividend Strategies Will Escalate
CHICAGO, IL--(Marketwired - Jan 23, 2014) - Today, 1 in 4
institutional investors report using smart beta ETFs, and adoption
among non-users is likely to accelerate in the near future,
according to a new study conducted by Cogent Research, a division
of Market Strategies International. The results reveal that nearly
half (46%) of institutional decision makers not currently using
smart beta ETFs indicate they are likely to start using the
products over the next three years, particularly institutional
investors with assets in excess of $500M.
Within the smart beta ETF category, low volatility funds have
experienced the greatest growth in 2013: an impressive 99% increase
in assets.1 This trend is expected to continue as two-thirds (67%)
of institutional decision-makers not currently using smart beta
ETFs indicate they are most likely to use low volatility funds
moving forward. In addition to low-volatility products, nearly
half (46%) of non-smart beta ETF users anticipate using high
dividend ETFs and over a third (34%) plan on using fundamentally
weighted investment strategies.
"We have been seeing increased interest in smart beta ETFs with
various institutional segments, and the research findings confirm
that increasingly institutions are implementing smart beta ETFs,"
said John Hoffman, Invesco PowerShares director of ETF
institutional sales and capital markets. "Smart beta ETFs make a
lot of sense for institutional investors seeking lower costs,
intraday liquidity, increased transparency, ease of implementation,
and strategies that go beyond market cap weighting."
Non-users indicate that the primary drivers of future usage
include making tactical adjustments to asset allocation (42%),
accessing higher beta strategies (40%), portfolio completion (40%),
and to reduce portfolio volatility (39%).
"We educate both users and non-users about the many benefits of
PowerShares smart beta ETFs, and these results reinforce our belief
that these products are great investment tools for institutional
asset managers as well as retail investors," said Dan Draper,
Invesco PowerShares managing director of global ETFs. "We're very
excited about the future potential of our investment category."
Full research results and analysis can be accessed by visiting
PowerShares.com/Institutional.
About The Study The data contained within this analysis was
collected from 193 participants between September 5 and October 2,
2013. A 15-minute online survey was administered by Cogent Research
to institutional decision makers, including pensions,
endowments/foundations, non-profit institutions, mutual funds, as
well RIAs who manage institutional assets.
Invesco PowerShares is not affiliated with Cogent Research.
Cogent Research is an independent full-service market research and
consulting firm, specializing in wealth management. Cogent Research
was hired by Invesco PowerShares to conduct the research used in
the creation of this study. Respondents were not made aware of
Invesco PowerShares' involvement in this research initiative.
About Invesco PowerShares Capital Management LLC and Invesco,
Ltd. Invesco PowerShares Capital Management LLC is leading the
Intelligent ETF Revolution® through its family of more than 140
domestic and international exchange-traded funds, which seek to
outperform traditional benchmark indexes while providing advisors
and investors access to an innovative array of focused investment
opportunities. With franchise assets over $87 billion as of
September 30, 2013, PowerShares ETFs trade on both US stock
exchanges. For more information, please visit us
at invescopowershares.com or follow us on Twitter
@PowerShares.
Invesco Ltd. is a leading independent global investment
management firm, dedicated to helping investors worldwide achieve
their financial objectives. By delivering the combined power of our
distinctive investment management capabilities, Invesco provides a
wide range of investment strategies and vehicles to our clients
around the world. Operating in more than 20 countries, the firm is
listed on the New York Stock Exchange under the symbol IVZ.
Additional information is available at www.invesco.com
1 Bloomberg LP, as of December 31, 2013
Glossary & Terms Beta: is a measure of risk representing how
a security is expected to respond to general market movements. For
example, a beta of one means that the security is expected to move
with the market. A beta of less than one means the security is
expected to be less volatile than the overall market. Betas greater
than one are expected to exhibit more volatility or movement than
the general market.
Market-Cap-Weighted: A type of index in which individual
components are weighted according to market capitalization. Index
value can be calculated by adding the market capitalizations of
each index component and dividing that sum by the number of
securities in the index.
Smart Beta: An alternative and selection index based methodology
that seeks to outperform a benchmark or reduce portfolio risk, or
both. Smart beta funds may underperform cap-weighted benchmarks and
increase portfolio risk.
Volatility: the annualized standard deviation of monthly index
returns.
General Risk Information There are risks involved with investing
in ETFs, including possible loss of money. Index-based ETFs are not
actively managed. Investments focused in a particular industry are
subject to greater risk, and are more greatly impacted by market
volatility, than more diversified investments. Shares are not
actively managed and are subject to risks similar to those of
stocks, including those regarding short selling and margin
maintenance requirements. Ordinary brokerage commissions apply. The
Fund's return may not match the return of the Underlying Index.
An investor should consider the Funds' investment objectives,
risks, charges and expenses carefully before investing. For this
and more complete information about the Funds call 800 983 0903 or
visit invescopowershares.com for a prospectus. Please read the
prospectus carefully before investing.
Media Contacts: Kristin Sadlon Porter Novelli 212-601-8192 Email
Contact Bill Conboy 303-415-2290 Email Contact
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