BBH 2023 Greater China ETF Investor Survey: Greater China ETF Market Grows as Product Platform Expands and Investors Evolve Usage

June 27, 2023
  • Investor Services
The number of investors with more than 25% of their portfolio invested in ETFs is up 11% from 2022.

Hong Kong, June 27, 2023 – Greater China ETF investors are expanding their usage of ETFs and accessing new and diverse products, despite challenging market conditions, according to the findings of the 6th Annual Greater China ETF Investor Survey from Brown Brothers Harriman & Co. (BBH), a global ETF custodian and administrator.

The report, released today, is a subset of BBH’s 10th Annual Global ETF Investor report, and represents the opinions of more than 100 institutional investors, financial advisors and fund managers from the Mainland, Hong Kong and Taiwan. In total, 59% of respondents manage over USD 1 billion in assets.

Key Findings:

  • ETFs are integral components of investors’ portfolios: Investors in Greater China continue to allocate capital to ETFs and 75% of investors expect their use of ETFs to increase this year.
  • Mainland investors’ demand for Hong Kong listed ETFs increases: 69% of these investors purchase Hong Kong listed ETFs through the existing cross-border programs. 62% of Mainland investors are interested in managed risk strategies, while 43% prefer ESG or thematic strategies via ETF inclusion in Stock Connect.
  • Thematic ETFs expand their reign: Over 90% of investors are planning to increase or maintain their exposure in thematic ETFs. Internet/Technology, Robotics & AI and ESG are the top three thematic strategies in demand.
  • Flight to safety continues: Given market volatility, 85% of investors in the region prefer managed risk strategies. 79% of investors also expect to increase their exposure to ETFs with dividend/income strategies.
  • Macro trends fuel appetite for fixed income: Investors are turning to fixed income ETFs at a rapid rate due to the interest rate environment. 50% of investors are planning to allocate to fixed income ETFs this year with short duration/money market exposure being the top choice.
  • Optimistic about ESG: 62% of investors in the region are planning to allocate to ESG investments. In terms of ESG ETFs, most investors are evaluating products by reviewing company statements/reports for underlying holdings.
  • Active is on the rise: 50% of investors allocated from index and active mutual funds to actively managed ETFs. 88% of investors plan to increase or maintain their exposure in actively managed ETFs as more of these products are introduced.
  • Investors use ETFs to adapt strategy: As portfolios shift to align with the market cycle, respondents are using smart beta ETFs to mitigate risk (65%), reduce volatility (54%) and generate income (49%).

“Despite market turbulence, investors in the region are turning to ETFs as tools to navigate risk and diversify portfolios. ETFs are playing an increasingly vital role in investors’ asset allocation strategies and our survey highlights the resounding interest from investors across a wide range of strategies and asset classes,” said Chris Pigott, Asia Head of ETF Services at BBH.

“The responses support that the ETF wrapper is an optimal vehicle for a wide range of exposures and we are seeing asset managers listing a diverse set of products in the region. Investors across the region do have different approaches to selecting ETFs or how they access the product, and throughout the survey we focus on these nuances that asset managers need to consider as part of their ETF strategy.”

Read the full report here: 2023 Greater China ETF Investor Survey.

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BBH’s Investor Services business provides cross-border custody, accounting, administration, execution and advanced technology services to many of the world’s leading asset managers and financial institutions. BBH’s Investment Management and Private Banking businesses manage public and private securities portfolios, advise banking clients on strategic direction, provide debt financing and banking services and offer trust and estate services.

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