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Columbia Threadneedle Moves Into Expanding Smart Beta Field

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Columbia Threadneedle, part of Ameriprise Financial (AMP), says one of its units is acquiring Emerging Global Advisors, a maker of smart-beta portfolios focused on emerging markets. This news emerged just as BlackRock’s iShares business projected that smart-beta ETF assets will reach $1 trillion globally by 2020 and $2.4 trillion by 2025.

Current smart beta ETF assets are about $282 billion, reflecting an annual organic growth rate of 19%, double the growth rate of the overall ETF market. “Minimum volatility and factor (multi and single) funds are expected to be key drivers of future growth and represent over 60% of new smart beta flows through 2025,” according to a statement released by BlackRock iShares on Thursday.

“The team is excited about joining Columbia Threadneedle Investments and building on our complementary strengths to deliver smart-beta strategies across asset classes to investors,” said EGA CEO Marten Hoekstra, who formerly led UBS’ wealth management operations in the Americas, in a statement on Wednesday.

As part of its efforts to enter the smart beta marketplace, Columbia Threadneedle has filed a preliminary registration statement with the Securities and Exchange Commission regarding multiple equity smart-beta ETFs, including the Columbia Sustainable Global Equity Income ETF, Columbia Sustainable International Equity Income ETF and Columbia Sustainable U.S. Equity Income ETF (referred to as Columbia Beta AdvantageETFs).

BlackRock said recently that it had launched nine new iShares Edge MSCI Multifactor Sector ETFs, which expanded the iShares suite of multifactor ETFs to 15 funds and includes sector exposures for the first time.

It also reports that some $31 billion in new flows went into smart-beta ETFs in 2015. About $11 billion of these flows were concentrated in minimum-volatility products; that level has already been surpassed in the first five months of 2016 – with some $12.6 billion of inflows.

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