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Asia Pacific ETFs go off the boil

The total assets under management (AUM) of the Asia-Pacific exchange-traded fund (ETF) space hardly budged in the first four months of 2014, staying at around the USD170 billion mark.

A USD2.7 billion gain in ETF AUM in Japan in the January to April period was offset by falls of USD2.5 billion, USD0.2 billion and USD2.2 billion in China, Hong Kong and Korea, respectively.
 
The sluggish performance in ETF AUM is likely more due to uncertain global market conditions than investors losing faith in ETFs as viable investment options in a portfolio.
 
As ETFs can be bought and sold like stocks, they tend to be subject to the vagaries of stock markets.
 
"A high level of conviction is needed to hold an ETF for the longer term," says Thusitha de Silva, Asia editor for Cerulli.
 
One big challenge that some ETF providers face in many countries in the region is that some names are generally not as well known in the retail space.
 
"So, to establish a retail presence, efforts are needed to build brand awareness and to get retail investors to understand the investment philosophies of ETF providers," de Silva adds.


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