BBH Greater China ETF survey finds huge increase in uptake
ETF custodian and administrator, Brown Brothers Harriman & Co (BBH), has published the findings of its fourth annual Greater China ETF Investor Survey, which reports that 92 per cent of investors in the region expect to increase their allocation to ETFs in the next year, an increase of 10 percentage points from 2020.
The survey found that despite recent market volatility, the appetite for ETFs continues to grow in Greater China, especially around thematic ETFs and fixed income strategies as advances in digital assets and innovation in ESG ETF strategies continue to evolve.
The Greater China findings are a subset of a larger global ETF investor survey that measured the expectations and preferences of 382 global ETF investors. Some 146 respondents represented Greater China including Mainland, Hong Kong, and Taiwan.
Among those surveyed, 58 per cent of respondents were institutional investors, 20 per cent financial advisers, and 22 per cent fund managers. 76 per cent of those respondents manage more than USD100 million in assets and 56 per cent have more than 25 per cent of their portfolio invested in ETFs.
2020 proved to be a banner year for ETFs in Greater China with the market now representing a USD270 billion industry, BBH says.
“Ongoing education efforts across the region around the structural benefits of the ETF wrapper seem to be resonating with investors while regional regulators and stock exchanges remain committed to developing the ETF infrastructure with a focus on enhancing liquidity and bringing more innovative products to investors in Greater China,” the firm writes.
“The enthusiasm for ETFs among Greater China investors continues to pick up momentum,” said Chris Pigott, Senior Vice President and Head of ETFs, Asia. “And as ETFs command a greater role in their portfolios, investors are naturally turning to more nuanced ETF types—whether that be ESG, active, fixed income, or thematic ETFs—to capitalise on opportunities or mitigate risk. Thematic ETFs have been a success story in the region as investors have utilised these products as an access vehicle to gain exposure to megatrends that are driving global economic growth. Aligned with the survey findings, we foresee continued product manufacturing in this space to meet the increasing investor demand.”
Key findings included the fact that thematic ETFs got the green light with resounding interest across the region with 91 per cent of Mainland investors, 86 per cent of Hong Kong investors, and 74 per cent of Taiwan investors looking to increase allocations to thematic ETFs this year.
Mainland access continues to draw interest from global investors: 86 per cent of global investors plan to increase investment into the mainland equity and bond markets in 2021.
ESG has captured the region’s attention: 92 per cent of investors in Greater China plans to allocate more capital to ESG strategies this year, the report finds. In five years, 53 per cent of investors expect to have at least 11 per cent of their portfolio in ESG ETFs. There is also an appetite for fixed income ETFs, with 76 per cent of respondents planning to increase their exposure to fixed income ETFs.