In Taiwan, Hughes believes the ETF market is gaining traction. “They are also starting to diversify. They have long-only and inverse leverage [products] so we’re hoping to work with local asset managers to bring in our Nasdaq 100 ETF.”
He also intends to bring a similar product to the Hong Kong Stock Exchange.
Other ETFs the firm is considering bringing to Asia include A-share healthcare, multi-income and technology index products.
“We try to take those concepts that have been successful elsewhere and adopt them to the markets here in Asia.”
Nasdaq launched two index trackers under China’s qualified domestic institutional investor (QDII) program: an ETF tracking the Nasdaq Biotechnology Index with mainland partner GF Fund Management earlier this year and, in 2013, one tracking the Nasdaq 100 Index, with Chinese asset manager Guotai.
Last November in Hong Kong, the firm worked with BMO to launch two locally-domiciled ETFs on the Hong Kong Stock Exchange.
However, Hughes admitted the development of ETFs in Asia will take time.
“The important aspect is getting retail [investor] participation,” he said. “The fee-based advisory model drives retail participation, but it is just starting to get introduced in Asia.
“We work with local partners and develop the market, but to develop the market, you must have that level of institutional versus retail participation. It’s difficult to have a long-lasting ETF market with a 90% institutional participation rate. Europe has gone through that in the last few years and is still going through that transition.”
