Asia’s top 20 ETFs collectively gathered $7.42bn in net new assets the first seven months of 2017. Nine of the passive products track equity indices, while eight provide exposure to fixed income indices and two to mixed asset class indices.
In terms of country listings, eight Korea ETFs made it on the the firm’s top 20 list of ETFs that gathered the most net inflows, followed by five from China, three each from Taiwan and Australia and one from India.
In Korea, ETF assets were driven mainly by institutional investors, who poured in a net of KRW 17.58bn ($15.3m) in assets during the first six months. That compares to net outflows of KRW 4.36bn for the full year 2016, according to data from the Korea Exchange.
Commenting on China, Hui Miao, Singapore-based senior analyst at Cerulli Associates, said the flows into ETFs are mainly the result of market sentiment and the trading mentality of local investors.
“The China ETFs on the list are mostly money market ETFs, as Chinese investors prefer to gain a `safe return’, especially when the market sentiment is weak and they do not find other good opportunities. With a high yield level, MM ETFs could attract great inflows.”
Top 20 ETFs by net new assets (NNA)
Source: ETFGI
Overall, ETF assets in Asia-Pacific (ex-Japan) rose by $21bn during the first seven months, reaching a record $147bn. The amount of assets gathered during the period is higher than 2016’s full-year net new assets of $11bn.
China, Korea and Australia were among the largest ETF markets in Asia-Pacific (ex-Japan) at the end of 2016, according to ETFGI data. Although Hong Kong is the largest ETF market in the region with $36.4bn in assets, none of its listed ETFs made it on ETFGI’s top 20 list.
Taiwan is the sixth largest ETF market in the region, having NT$285.4bn ($9.41bn) in assets at the end of April and accounting for 13% of the country’s onshore mutual fund market, according to the Taiwan Stock Exchange.
However, the region’s ETF market only accounts for 4% of the $4.12trn global ETF market.
Institutional push
The growth of ETF assets in the region may be attributed to the influx of new institutional investors and the continued growth in allocations among current investors, according to a Greenwich Associates report that was published this year.
These institutional investors include pension funds, endowments and foundations, asset management firms, insurance companies and registered investment advisors.
In Asia, allocations to ETFs among current users have reached almost 18% of their total assets. US investors have by far the largest allocations to ETFs, at around 21% of their assets, the Greenwich report said.
Global rise
The growth of ETF assets in the region mirrors what is happening globally. According to an ETFGI report, around $391.26bn in net new assets have been invested in ETF and ETP products listed globally in the first seven months, surpassing the record net new assets gathered in all of 2016.
Commenting on the rise of ETFs globally, Deborah Fuhr, London-based managing partner at ETFGI, said “ETFs are used to react tactically to political and economic news, short-term to equitise cash and long-term as strategic holdings.
“Investors will use active products where they can find alpha and often use ETFs as building blocks for asset allocation,” she added.
