“In a low interest rate environment, the demand for income and growth may not be met by fixed income investments alone,” said managing director Amit Prakash.
One ETF is a bond product, the Asia USD Investment Grade Bond ETF, which offers Asia US dollar bond exposure to a sampling of 450 Asian bonds.
The two equity products are the Hong Kong Banks ETF, which invests in Hong Kong-listed bank stocks and the Asia High Dividend ETF, which seeks to track the NASDAQ Asia ex-Japan Dividend Achievers Index.
Prakash believes that companies are shifting from bank loans to capital market activity in order to finance expansion, and BMO’s ETFs can provide exposure to that trend.
However, ETFs have little popularity in Hong Kong, with some sector ETFs trading at very low volume. Fund houses with ETF products face challenges such as investor education efforts.
Prakash said Hong Kong has about 120 ETFs but the products are primarily equity ETFs and half of them are focused on Hong Kong and China A shares.
“There’s not much a range of choice outside of that description. There’s a gap that can be filled by the type of products we’re bringing to market.”
Hong Kong has 25 ETF managers, according to BMO. Prakash added that competition among ETF players in Hong Kong for what seems to be a small pool of potential investors was not a concern.
“Market leadership is open,” he said.
Over the past three years, the top performing ETFs available in Hong Kong:
