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How Did Asia Strategic-Beta ETPs Weather the Storm? (Part 2)

Factors were the driving factor, but thorough due diligence needed prior to investing.

Jackie Choy, CFA 20 November, 2020 | 20:12

In part 1 of this article, we looked at the landscape of Asia Strategic-Beta ETPs as of June 2020. In this part of the article, we will continue to explore the performances in more details.

Looking at these products' recent performance through the lens of strategic-beta groups reveals more detail. In the first half of 2020, only the growth and momentum strategic-beta groups scored success rates (the number of strategic-beta ETPs outperforming their respective category indexes) of greater than 50%. This could be explained by their relative factor performances during the same period. Similarly, the low success rates in the other strategic-beta groups could largely be explained by the performance of their corresponding factors. For example, as shown in Exhibit 6, the MSCI AC Asia ex Japan High Dividend Yield Index underperformed the parent index by 10.7%. The success rate among funds in the dividend strategic-beta group was just 18.3%. Another example was the outperformance of the growth factor against the value factor for Asia ex-Japan equity, which appeared to explain the high success rate in the growth strategic-beta group and the low success rate in the value strategic-beta group. However, investors should be cognizant that the Asia-Pacific markets are a mixed bag. Each market may have seen different factors perform quite differently, as illustrated in Exhibit 6.

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About Author

Jackie Choy, CFA  is the Director of ETF Research for Morningstar Investment Management Asia

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