Actively Managed ETFs Just Had A Great Month

February 07, 2017

Values-Based Investing

Inside ETFs gave plenty of airtime to the industry’s progress in measuring environmental, social and governance behavior within corporations, and was abuzz with talk of all the new ESG ETF launches. But January didn’t bring much action to these funds, just $13.2 million, or one-third of what their December 2016 market share would suggest. 

The largest, oldest ESG funds lost assets in January. The gains came in the newer, thematic funds such as the iShares MSCI ACWI Low Carbon Target ETF (CRBN) and the Global X S&P 500 Catholic Values (CATH), which each brought in $9 million or more.

“Smarting” Beta

The other industry favorite, strategic or “smart” beta, fared somewhat better, but still lost market share, as strategic funds took in only two-thirds of the dollars that their year-end asset levels would have suggested. 

Smart-beta strategies that started 2017 with significant market share fared poorly in January, at least in comparison to vanilla and active ETFs. Strategies that had outflows, or anemic inflows, represented 12.3% of starting market share, while strong inflows went to only 9.8% of starting market share.

Here’s how it looks for all strategies with flows over $100 million: 

 

The obvious standouts are the risk-on plays: high beta and technical. Winner funds included the PowerShares S&P 500 High Beta Portfolio (SPHB), which attracted over $211 million in January—granted, $211 million is not a huge monthly inflow. Indeed, 70 U.S.-domiciled ETFs brought in more than that during January. But $211 million was a huge dollar amount for the fledgling high-beta strategy. All (both) high-beta funds had only $768 million jointly at the close of 2016. High beta commanded little market share before, and after, January’s inflows.

 

 

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