Homegrown asset managers grab limelight in Asia ETF boom

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Double-digit growth in exchange traded fund assets across many Asia-Pacific markets last year helped a handful of local fund firms strengthen their position as market leaders.

Taiwan, South Korea and China stood out as the fastest-growing ETF markets in the Asia-Pacific region during the first nine months of 2023, with ETF asset growth rates of between 26 per cent and 31 per cent, Broadridge data shows.

This helped the region outpace global growth in ETF assets under management, surpassing Europe with an 18 per cent compound annual growth rate across the region. Total assets of passive ETFs listed in the region rebounded to $1.1tn at the end of September, up from $962.8bn at the end of 2022.

In the three fastest-growing ETF markets China Asset Management, the largest ETF provider in the Chinese market, saw the biggest surge in net assets of $11.7bn in 2023 to the end of September, a 29 per cent jump that took the firm’s ETF assets to $40.4bn, according to Broadridge data.

Close on its heels was China’s E Fund Management, one of the largest ETF issuers this year, which added $8.1bn in ETF assets over the same time period, representing a rise of 33 per cent, bringing total ETF assets to $32.7bn.

In China, buoyed by capital commitment from large state-owned backers, broad-based ETFs led by the ChinaAMC SSE STAR Market 50 ETF and the E Fund ChiNext ETF have continued to attract flows throughout the year.

Bryan Liu, associate director at Broadridge, said China’s ETF market was poised for continued growth, fuelled by supportive government policies to lower fees and investment costs, as well as growing interest from both retail and institutional investors.

Elsewhere, Taiwan’s ETF industry has been one of the fastest growing in Asia, with assets surging 31 per cent from $76.8bn in December 2022 to $100.8bn in September 2023.

Yuanta Funds, the largest ETF provider in Taiwan, added $6.9bn in ETF assets under management in the first nine months of last year, a jump of 28 per cent taking total ETF assets to $31.5bn.

Yuanta also manages Taiwan’s largest ETF, the Yuanta Taiwan Top 50 ETF, which is the largest ETF in the market, with NT$309.1bn ($9.9bn) in assets by mid-December.

Cathay Securities, Taiwan’s second-largest ETF issuer, added $3.8bn in ETF assets, representing a 26 per cent jump in ETF assets to reach $18.3bn.

South Korea achieved the third-largest growth in ETF AUM, with a 15 per cent increase from $52.4bn to $60.1bn during the first nine months of 2023.

Mirae Asset Global Investment has been the biggest beneficiary of the ETF growth in South Korea, adding $4.3bn in the first nine months of last year, representing a 21 per cent jump in ETF assets to $25.1bn.

It was followed by Samsung Asset Management, which added $1.9bn in ETF assets, a 9 per cent increase, bringing total assets to $23.4bn.

Japan, which remains the largest ETF market in the region, recorded 10 per cent growth in ETF assets over the same period, with large established local ETF players seeing a big influx of ETF flows thanks to a long-awaited stock market revival.

Nomura Asset Management led the Asia Pacific region with the largest net increase, amounting to a $15.7bn uplift in the first nine months of last year, representing an 8 per cent jump that took its total ETF assets to $209.3bn.

BlackRock saw its total ETF assets in the Asia-Pacific region increase by $8bn to reach $52.7bn in net assets, reflecting an 18 per cent rise in ETF assets under management, Broadridge data shows.

Total flows to Japan ETFs declined steeply from $64.5bn in 2020 to just $4.2bn in 2022, as the Bank of Japan pared down its ETF buying programme, before rebounding to $8.5bn over the first nine months of 2023.

Across the Asia-Pacific region, locally listed ETFs captured total net inflows of $126.2bn in the first nine months of last year.

China led with the highest inflows of $72.5bn, followed by Taiwan with $20.7bn and Japan with $8.4bn, as of September 2023.

*Ignites Asia is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at ignitesasia.com.