BBH’s 6th Annual Greater China ETF Investor Survey captures the opinions of more than 100 ETF-focused investors about their usage, selection, and demand for ETFs in the region.
This year, BBH captured responses from institutional investors, financial advisors, and fund managers from Mainland, Hong Kong, and Taiwan.
Our findings show investors are expanding their usage of ETFs and accessing new and diverse products. Despite challenging market conditions, broad usage of ETFs and overall consistent demand reflect their appreciation of the ETF wrapper, regardless of volatility and cyclicality.
- Consistent investor demand signals the still nascent but expanding opportunity for ETFs in the region
- Mainland investor demand for Hong Kong ETFs increases, with a preference for managed risk strategies, ESG or thematic strategies via the cross-border access channels
- Given market uncertainty, investors in the region are playing it safe, opting for managed risk strategies. At the same time, they’re showing greater appetite for diversification
- Thematic ETFs expand their reign with investors planning to maintain or increase their exposures. Internet/Technology is the most preferred thematic strategy
- An overwhelming majority of investors plan to increase or maintain their exposures to active ETFs as the region introduces new actively managed ETFs
- 50% of investors in the region plan to increase their allocations to fixed income ETFs
Below we highlight key findings from our survey and encourage you to download the full report here.
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Key Findings
- ETF allocation keeps pace: With 75% of investors expecting their use of ETFs to grow, consistent demand signals the still nascent but expanding opportunity for ETFs in the region.
- Mainland investor demand for Hong Kong ETFs increases: 62% of these investors demand managed risk strategies, while 43% prefer ESG or thematic strategies via the cross-border access channels.
- Investors play it safe while diversifying: Given market uncertainty, 85% of investors in the region prefer managed risk strategies. At the same time, they’re showing greater appetite for diversification through defined outcome ETFs and dividend/income ETFs.
- Thematic ETFs expand their reign: Interest in thematic ETFs continues with over 90% investors planning to maintain or increase their exposures. Internet/Technology is the most preferred thematic strategy.
- Investors lean toward fixed income: 50% of investors in Greater China plan to increase their allocations to fixed income ETFs over the next 12 months. 50% of those investors expect to increase their exposure to short-term bond/money market ETFs.
- Active ETFs are nascent but on the rise: 88% of investors plan to increase or maintain their exposures as the region introduces new actively managed ETFs.
- Rules-based investing approach grows: More capital is flowing into smart beta ETFs, with 77% of investors allocating from mutual funds into these funds.
- Virtual trumps in-person as a preferred way to meet: A staggering 76% of investors in the region prefer digital meetings. 66% prefer receiving digital content and insights.
Big Changes
- ETFs make up more of investors’ portfolios: The number of investors with more than 25% of their portfolio invested in ETFs is up 11% from 2022.
- Selection criteria is changing: Across Greater China, index methodology moved to being the most important criteria, up from 6th place last year. But there are more significant shifts locally. For instance, in Mainland, trading spreads ranked as the most important factor after being ranked last in 2022.
- Thematic ETF demand not slowing down: 82% of investors in Greater China plan to add these strategies, up 10% from 2022. In the next three years, 36% of investors foresee thematic ETFs making up 11-20% of their portfolio.
- Investors more optimistic about ESG than their global peers: More investors in the region are planning to allocate than those in the U.S. and Europe (62% in Greater China vs 45% in the U.S. and 44% in Europe).
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