Affin Hwang Asset Management (Affin Hwang AM) marked a new milestone with the debut of its smart beta exchange-traded funds (ETFs) that were successfully listed on the main market of the Bursa Malaysia stock exchange.

The company simultaneously listed two smart beta ETFs on the Bursa, namely the TradePlus MSCI Asia ex Japan REITs Tracker and the TradePlus DWA Malaysia Momentum Tracker. The ETFs seek to combine the best of both active and passive strategies by investing in companies based on a series of objective factors.

The TradePlus MSCI Asia ex Japan REITs Tracker aims to provide investors with access to consistent dividend-yielding REITs in Asia (excluding Japan) through the smart beta selection of the index. Against a backdrop of high volatility in the market, investors can add a measure of stability in their portfolios with consistent dividend pay-outs from real estate investment trusts (REITs).

The TradePlus DWA Malaysia Momentum Tracker aims to provide investors with exposure to local stocks with the highest price momentum as its smart beta factor. Being the country’s first momentum strategy on the Bursa, investors can potentially reap higher returns by capturing stocks with the most upswing momentum to ride the recovery in the local stock market.

Smart beta ETFs are innovative forms of ETFs that apply a series of objective factors when selecting its component companies. These component companies are then ranked and weighted according to specific factors like earnings growth, price momentum or dividend yield. 

This approach provides an alternative strategy compared to traditional market-cap weighted ETFs that are biased towards larger-cap stocks because they constitute a heavier weight in an index.  By complementing their portfolio with smart beta strategies, investors can potentially exploit market anomalies and uncover hidden value to reap better risk-adjusted returns.

“With their low-cost advantage, smart beta ETFs are ideal building blocks for investors to pile on different strategies such as dividend or momentum factors to construct a diversified portfolio, ” says Teng Chee Wai, managing director of Affin Hwang AM.