A year of extraordinary growth
Nikko Asset Management: Best Asia Equity ETF Provider – Phillip Yeo, Joint Global Head of ETF Business at Nikko AM, explains that over 2019, the firm saw assets under management in ETFs grow by 30 per cent, up to USD81 billion. Growth was organic and on the back of new assets flowing in, he says. “2019 was a good year for equities and markets as a whole, with organic growth but also the momentum of investors being interested in ETFs and looking for no hassle exposure to the markets.”
Cost has also been a feature. Yeo says: “As a firm we have always endeavoured to offer low cost investment solutions to investors which are also commercially viable. We are not doing anyone a favour if we offer a solution that cannot survive and Nikko AM is committed to low cost and reasonable commercial viability in the long run.”
In Japan, Nikko AM’s ETF business grew 30 per cent, mostly from the firm’s flagship Listed Index Fund TOPIX and Listed Index Fund 225 ETFs which raised approximately USD 13.7 billion in assets in 2019.One particular new launch attracted interest, the Listed Index Fund J-REIT (Mini) ETF which raised USD10 million in June and was at USD60 million by the end of 2019.
“REITs are attractive in the low interest rate environment experienced in Japan,” Yeo says. “Japanese REITs yield about 3.5 per cent in dividends, suiting Japanese investors looking for income.”
Another development between Japan and China has been a formal collaboration on ETF provision. This has seen Nikko AM working with Chinese partner, E Fund Management Co, Ltd a top ETF issuer in China. The result has been an inflow of USD16 million out of China, from Chinese investors. “This is breaking new ground,” Yeo says. “It is exciting and early days but could become something a lot bigger.”
In Singapore, ETF assets for Nikko AM grew by 32 per cent across the range of two bond ETFs, one equity ETF and an Asian REIT ETF, bringing assets up to USD1.5 billion. All four of the Nikko AM Singapore ETFs are in the top 10 of the Singapore Stock Exchange listings.
Despite volatility in early 2020 Nikko AM’s Hong Kong launch of a global internet ETF in October last year has survived well in spite of the challenging environment, having soared to a return of 26 per cent, it is still in positive territory and 12 per cent up.
Nikko AM has not seen heavy redemptions of their ETFs, perhaps partly cushioned by retail support, and the unique ABF Singapore Bond Index Fund ETF which has acted almost like a safe haven asset which saw an appreciation in value of 4 per cent over the recent month. Similar to gold, this product tends to do particularly well in times of crisis, uncertainty and market distress.
Yeo says: “The ABF Singapore Bond Index Fund, over the last 15 years since inception, always seems to have an inverse correlation to the broad markets in times of distress. The Singapore dollar currency and the Singapore government bonds are often perceived as safe havens when investors seek to de-risk.”
Joint Global Head of ETF, Business, Nikko AM
Phillip Yeo is the Joint Global Head of the ETF Business at Nikko Asset Management. The Firm manages a suite of ETFs with over USD 80 billion of assets under management. Phillip studied at Nanyang Technological University in Singapore and graduated with honours in Business. He has a Master of Business Administration from The Imperial College in London, UK and is a Chartered Financial Analyst® charterholder and a Chartered Accountant with ISCA.