Stepping on the Gas: ETF Adoption in Mainland China Accelerates

June 09, 2021
  • Investor Services
An astonishing 92% of investors in the region expect to increase their allocation to ETFs in the next year, an increase of 10 percentage points from 2020.

Hong Kong, June 9, 2021 – Brown Brothers Harriman & Co. (BBH), a market leading ETF custodian and administrator, today released the findings of its 4th annual Greater China ETF Investor Survey. 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. 58% of respondents were institutional investors, 20% financial advisers, and 22% fund managers. 76% of those respondents manage more than $100 million in assets and 56% have more than 25% of their portfolio invested in ETFs.

2020 proved to be a banner year for ETFs in Greater China with the market now representing a $270 billion industry. 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 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 capitalize on opportunities or mitigate risk. Thematic ETFs have been a success story in the region as investors have utilized 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 include:

  • Thematic ETFs get the green light: There’s resounding interest across the region with 91% of Mainland investors, 86% of Hong Kong investors, and 74% of Taiwan investors looking to increase allocations to thematic ETFs this year.
  • Mainland access continues to draw interest from global investors: 86% of global investors plan to increase investment into the Mainland equity and bond markets in 2021.
  • ESG has captured the region’s attention: 92% of investors in Greater China plan to allocate more capital to ESG strategies this year. In 5 years, 53% of investors expect to have at least 11% of their portfolio in ESG ETFs.
  • There’s an appetite for fixed income ETFs: 76% of respondents plan to increase their exposure to fixed income ETFs.

Read the full report here: 2021 Greater China ETF Investor Survey

 

About Brown Brothers Harriman

BBH is a privately held financial institution that has been a thought leader and solutions provider for over 200 years. The firm serves individuals, families, businesses and institutions in its three business lines: Private Banking, Investment Management, and Investor Services. BBH’s culture of accountability fosters deep and lasting relationships built on commitment, adaptability and trust. The company is independent, selective, and specialized by design.

BBH’s Investor Services business provides cross-border custody, accounting, administration, execution and technology services to many of the world’s leading asset managers and financial institutions. With deep ETF product expertise, BBH works with both experienced ETF managers and new, innovative market entrants to introduce and grow their ETF products. BBH helps asset managers launch, list, and cross-list ETFs across the globe.

BBH operates its global business out of seventeen offices located in New York, Beijing, Boston, Charlotte, Chicago, Dublin, Grand Cayman, Hong Kong, Jersey City, Kraków, London, Luxembourg, Nashville, Philadelphia, Tokyo, Wilmington and Zürich. For more information, please visit www.bbh.com.

BBH is a registered service mark of Brown Brothers Harriman & Co. in the United States and other countries.

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2021 Greater China ETF Investor Survey

As part of our eighth annual ETF Survey, we broke out Greater China respondents to outline the emerging trends in usage, selection, and demand for exchange-traded funds in the region.

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