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US specialist ETF firm eyes Asia

Acquired by Mirae Asset Global Investments last year, Global X has begun promoting its products in the region.
Jay Jacobs, Global X

Founded in 2008, Global X manages around $11bn in thematic and income-focused ETFs, which are primarily listed in the US.

The New York-based firm has been focused on sales to investors in the US. However, it is now exploring opportunities in Asia after it was acquired by Mirae Asset in July last year, according to Jay Jacobs, Global X’s head of research and strategy.

“Mirae, on one hand, wanted a presence in the US and to expand their ETF footprint. But at the same time, they want to further grow their business in Asia by promoting the products of other ETF providers that they own globally,” he told FSA.

Global X is one of the ETF companies that the Korean firm owns. The others include Horizons ETF in Canada and Hong Kong, Beta Shares in Australia and Tiger ETF in Korea.

“Since the acquisition, the day-to-day management for Global X has not changed. What has changed is that now we are thinking about how our products might appeal to investors globally, especially in Asia,” he said.

Japan JV

 So far, the biggest move in Asia that the US firm has made together with Mirae is partnering with Tokyo-based Daiwa Securities and Daiwa Asset Management in September to create a joint venture ETF firm in Japan, which will be called Global X Japan.

Jacobs believes that Japan will be a key market for the firm, especially since it is the largest ETF market in Asia. As of the end of September, ETF assets in Japan totaled $370bn, accounting for 60% of Asia-Pacific’s $613bn ETF market, according to data from ETFGI.

“It is also a very localised market, in which the majority of the distributors are local. So we realised that being able to access the Japanese market depends on having a domestic partner like Daiwa to be successful,” he added.

The first task is to bring its US-listed ETFs to the local market, according to Jacobs.

“The second phase is to launch domestic ETFs in Japan, which will be managed by a Tokyo-based team,” he added.

Mirae’s distribution partners

Elsewhere in Asia, the firm will rely on Mirae Asset’s distribution partners.

“In Hong Kong and Singapore, for example, Mirae already has a presence and has relationships with distributors and institutions, so it does not require much of an extensive partnership to be successful,” Jacobs said.

The firm is now in conversations with Asia-based institutions and private banks, but does not plan to sell to the retail base, he said.

“You still have to go through the institutions and private banks first to build your brand before going to the retail market,” he explained.

Separately, one of the firm’s products, the Global X Uranium ETF, was also added to Singapore-based robo-advisory firm Kristal AI’s investment platform.

Hopes for themed ETFs

In terms of client interest, Jacobs believes that there is demand for the firm’s cloud computing and healthcare-related ETFs.

“Cloud computing resonates well among investors in the region because Asia’s technology markets, such as Korea and Japan, have historically been focused on the hardware space, which has been affected by the recent trade wars, whether it is US and China or Japan and Korea.

“Cloud computing companies are more US-oriented and less impacted by cross-border trade and the sector continues to grow.”

On the healthcare front, Jacobs believes that investors in Asia are even more interested in the theme than their US counterparts.

“What I find interesting is our healthcare-related ETFs, such as the Longevity ETF and few biotechnology products have a more avid following in Asia than in the US.

“Perhaps the interest is driven by demographic factors, such as the rapidly growing middle class and aging populations in Asia.”

Part of the Bonhill Group.