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  1. Smart Beta ETFs: Introduction
  2. Smart Beta Groundwork: What is meant by Alpha and Beta?
  3. Smart Beta Concepts: Definition
  4. Smart Beta Background: Portfolio theory, CAPM and EMH
  5. Strategies for Smart Beta ETFs
  6. Smart Beta History and Evolution
  7. Smart Beta Foundations: Market Capitalization-Weighted Indexes
  8. Smart Beta Foundations: Dogs of the Dow, An Early Rules-Based Strategy
  9. A Pioneering Smart Beta ETF
  10. Smart Beta in the New Millennium
  11. Smart Beta Fundamentals: Factors and Factor Investing
  12. Which Smart Beta Factors / ETFs Should You Focus on?
  13. Biggest Smart Beta ETFs
  14. Risks of Smart Beta Investing
  15. Smart Beta ETFs: Conclusion

 

Exhibit 6 lists the Top Ten Smart Beta ETFs, listed by assets under management. The two biggest ETFs, the iShares Russell 1000 Growth and Value ETFs, were launched in May 2000 and were among the very first Smart Beta ETFs to be introduced to the marketplace.

These 10 ETFs collectively have $200 billion in AUM, or roughly one-half of all ETF industry assets. Dividend ETFs dominates the Top Ten, with as many as four from this category. Dividend ETFs have become increasingly popular as investors' hunt for income alternatives continues apace. These ETFs have become the biggest area of Smart Beta, having quadrupled in the past five years to $123 billion, according to Bloomberg Intelligence.  Three Growth ETFs also figure in the Top Ten, followed by two Value and a single Minimum Volatility ETF.

Exhibit 6: Top Ten Smart Betas (ranked by AUM)

Smart Beta ETF

AUM

($bn)

Index Tracked

Weighting Method

Expense Ratio

Top Three Sectors

iShares Russell 1000 Growth ETF (IWF)

$30.4

Russell 1000 Growth Index

Market cap.

0.20%

Technology

Cons. Discretionary

Health Care

iShares Russell 1000 Value ETF (IWD)

 

$30.2

Russell 1000 Value Index

Market cap.

0.20%

Financials

Energy

Health Care

Vanguard Value ETF (VTV)

 

$22.5

CRSP U.S. Large Cap Value Index

Multi-factor

0.08%

Financials

Health Care

Industrials

Vanguard Dividend Appreciation ETF (VIG)

$22.2

Nasdaq U.S. Dividend Achievers Select Index

Market cap.

0.09%

Industrials

Consumer Goods

Consumer Services

Vanguard Growth ETF (VUG)

 

$21.4

CRSP U.S. Large Cap Growth Index

Multi-factor

0.08%

Technology

Consumer Services

Health Care

iShares Select Dividend ETF (DVY)

$16.3

Dow Jones Select Dividend Index

Dividends

0.39%

Utilities

Financials

Industrials

Vanguard High Dividend Yield ETF (VYM)

$15.3

FTSE High Dividend Yield Index

Market cap.

0.09%

Consumer Goods

Technology

Financials

SPDR S&P Dividend ETF

(SDY)

$14.8

S&P High Yield Dividend Aristocrats Index

Market cap.

0.35%

Financials

Industrials

Consumer Staples

iShares Edge MSCI Minimum Volatility USA ETF (USMV)

$14.6

MSCI USA Min. Volatility (USD) Index

Market cap.

0.15%

Financials

Health Care

Technology

iShares S&P Growth ETF (IVW)

 

$13.9

S&P 500 Growth Index

Market cap.

0.18%

Technology

Cons. Discretionary

Health Care

Sources: www.etfdb.com, Bloomberg, ETF Provider websites                                   Data as of August 31, 2016 close

 


Risks of Smart Beta Investing
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