Smart Beta ETFs Gain Traction as New Entrants Enter Space
NEW YORK, Oct. 21, 2015 /PRNewswire/ -- Exchange-traded funds (ETFs) representing derivatives and alternative strategies were the most popular type of product launched during 2015, based on a review of new ETF products serviced by BNY Mellon during the nine months to September 30, 2015. Alternatives and derivatives-based ETFs accounted for 25 percent of new funds over this period, continuing the trend seen in 2014 when they accounted for the same percentage.
Smart beta ETFs accounted for 12.5 percent of new launches, fixed income accounted for 6.25 percent, and actively managed ETFs accounted for five percent. BNY Mellon serviced a total of 64 new funds in the nine-month period.
Speaking at BNY Mellon's annual ETF Symposium in Dana Point, California, Steve Cook, business executive, structured product services at BNY Mellon, said, "Growing interest from registered investment advisors looking for downside protection appears to be an important driver of the growth of alternatives-based ETFs. In addition the possibility of rising interest rates has advisors looking for alternatives to fixed income investments. The structure and tax efficiencies of ETFs enhance the attractiveness of this type of investment."
He attributed the increase in smart beta ETFs launched and serviced by BNY Mellon in 2015 to the increasing number of entrants developing these offerings. In 2014, this type of ETF accounted for 4.4 percent of BNY Mellon's new ETF strategies. The number of actively managed ETFs launched in 2015 declined to five percent from 25 percent in 2014, BNY Mellon said.
"We attribute the lower level of actively managed launches in 2015 to pending regulatory rulings on this segment of the ETF market," said Cook. "Many firms with these active offerings in the pipeline are awaiting the outcomes on these rulings before moving ahead. We expect a significant upswing in actively managed ETF launches once the new regulations become clear."
BNY Mellon is one of the world's largest ETF servicers, and this is the fourth year that it has hosted its ETF Symposium, which highlights best practices and strategies for registered investment advisors, sponsors, investors and other participants in the ETF Industry.
"The BNY Mellon ETF Symposium continues to attract registered investment advisors and other financial professionals who depend on ETFs as part of their investment strategy," said Frank La Salla, chief executive officer of BNY Mellon's Alternatives Investment Services and Structured Product Services. "Attendees have told us the symposium helps them gain insight into the way their peers view a range of topics such as balancing active and passive strategies and how ETFs can provide efficient access to a wide range of asset classes."
BNY Mellon has a long history supporting the unique servicing needs of ETFs and has played a leading role in the development of procedures and systems integral to some of the first and most innovative products of the ETF industry. As of September 30, 2015, BNY Mellon supported 35 ETF issuers, with 603 separate ETFs in the U.S., Europe and Asia with approximately $260 billion in net assets.
BNY Mellon's Asset Servicing business supports institutional investors in today's fast-evolving markets, safeguarding assets and enhancing the management and administration of client investments through services that process, monitor and measure data from around the world. We leverage our global footprint and local expertise to deliver insight and solutions across every stage of the investment lifecycle.
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of Sept. 30, 2015, BNY Mellon had $28.5 trillion in assets under custody and/or administration, and $1.6 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.
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SOURCE BNY Mellon