New research highlights increasing use of ETFs to access Chinese asset classes

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New research with 150 European institutional investors and wealth managers with a combined AUM of USD292.8 billion has highlighted the increasing use of ETFs to gain exposure to Chinese equities and bonds.  

Over three quarters (78 per cent) expect to see an increase in the use of ETFs to access Chinese asset classes over the next three years.

The study was carried out by NTree International Ltd on behalf of investment manager China Post Global, which manages a family of innovative Exchange-Traded Funds (ETFs) providing access to commodities and emerging markets through its brand Market Access.  NTree, which has expertise in investor education and the distribution of ETFs, promotes Market Access ETFs in Europe.

When asked why they think the use of China focused ETFs will increase between now and 2024, 67 per cent of institutional investors said that they provide a more specialist and niche exposure to Chinese equities and bonds. A further 60 per cent said it is because there is greater innovation in the ETF marketplace, over half (55 per cent) said that they are more competitive than mutual funds, and 54 per cent said that their liquidity is expected to improve.

The research also highlights the growing interest in Chinese capital markets, with three quarters (75 per cent) of institutional investors expecting foreign investment into Chinese equities to increase and 63 per cent expecting foreign investment into fixed income to increase.

Tim Harvey, CEO at NTree, says: “Our research shows the growing demand for Chinese asset classes among institutional investors but also a desire for specialist, innovative products such as ETFs which can provide access at more competitive prices.”

Danny Dolan, Director at Market Access, says: “This strong demand for China exposure among European institutional investors is no surprise, given the excellent performance of the Chinese equity market since early 2020, and the unparalleled bonds yields available in China compared to other major economies. The ever-increasing demand for China ETFs shows the need for innovative solutions that meet investors’ needs — such as our Market Access China Minimum Variance ETF."