More than three quarters (77%) of Greater China investors plan to increase their use of ETFs (exchange-traded funds) in the next twelve months, according to a survey from Brown Brothers Harriman.
The firm’s annual Greater China ETF Investor Survey found that two thirds plan to increase the number of issuers they work with and almost half (47%) use ETFs to express their short term tactical investment views.
The US-headquartered private investment bank said it surveyed 103 ETF investors in Mainland China, Hong Kong and Taiwan, with more than half (59%) handling more than $1bn in assets under management.
Over a third of respondents, which include institutional investors, financial advisors, private banks and wealth managers, have more than half of their portfolio invested in ETFs in the region, compared with just 24% from the global survey.
Since investors in the region tend to use ETFs to express tactical views, managing liquidity drew a high response from those surveyed.
When it comes to longer-term allocations, two thirds of respondents said they plan to increase their exposure to actively managed ETFs in the next year, and three-quarters have already bought an active ETF six-to-twelve months ago.
Almost half said index mutual funds were a top source from which they reallocated capital to purchase an active ETF.
ESG, fixed income and thematic ETFs are where investors surveyed plan to increase their exposure to in the next twelve months, according to most respondents in the region.
Greater China is the largest and fastest growing region in Apac for ETF adoption, according to the survey, with $557bn of ETF assets making up 38% of total Apac ETF assets which stand at $1.48trn.
Chris Pigott, Brown Brothers Harriman’s head of Asia ETF services, highlighted growing interest in active ETF products from the region.
“In the Mainland, investors (43%) preferred factors, while Hong Kong investors were most interested in active (40%) strategies,” he told FSA.
“Taiwan will be a market to watch as the regulator has given the green light for active ETFs to be launched for the first time. 57% of investors that we spoke to in Taiwan showed interest in active products especially multi asset active ETFs (47%).”
He said this demonstrates that investors are “no longer solely viewing ETFs as a passive index tracking vehicle”, and they can be used as tools to navigate different market cycles.
