The use of ETFs among Asian investors is likely to increase by up to 30% a year, in line with the expected growth rate for Europe, according to BlackRock.
The firm's latest ETF Landscape Asia Pacific Industry Review reveals, for the first time, net flows for ETFs and other exchange-traded products (ETPs) in the region.
There were 249 ETFs and ETPs listed in Asia Pacific at the end of April, with 374 listings and assets amounting to $69.9bn, from 60 providers.
These products are listed on 15 exchanges, across 12 countries, including Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Singapore, South Korea, Taiwan and Thailand.
Although the firm expects a growth rate of 20-30%, it says the exact figure is hard to determine as investors in the region continue to use products listed in the US and Europe, as well as those listed locally.
Nonetheless, the report says domestic onshore ETFs in Asia are becoming more popular, as they tend to provide unique exposure to markets that are often difficult to access, such as China A-share indices.
ETFs that are listed offshore in the US or Europe tend to be used by Asian investors for international exposure, rather than ETFs that are cross-listed in Asia.
The report shows institutional investors use ETFs largely for making tactical adjustments, equitising cash, and for transitions. Private banks cited using ETFs in core-satellite strategies, implementing their in-house model portfolios, fund of fund strategies, and implementing exposure to hard to access markets.
More brokerage firms and banks in the region are expanding their ETFs and delta one businesses, which also includes swaps, certificates and futures.
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