BMO Global Asset Management on November 6 launched three exchange-traded funds (ETFs) in Hong Kong, which will help address the specific needs of the investors.

Amit Prakash, managing director of BMO Global, notes that most of the ETFs available in the city are in the equity space, so the BMO Asia USD investment grade bond ETF can fill the gap for fixed income type product.

The bond ETF is the first one in Hong Kong that offers Asia USD bond exposure to over 450 Asian bonds across 150 issuers, giving investors an investment vehicle that aims to provide regular income with a potential for long-term capital preservation. It invests in high credit quality sovereign and corporate investment grade bonds denominated in US dollars that track the performance of the Barclays Asia USD investment grade bond index.

The constituents of the Barclays bond index include sovereign bonds issued by the Republic of the Philippines and Republic of Korea, while the corporate bonds include those of Hutchison Whampoa, CNOOC, Petronas and Tencent.

The second ETF to be launched is the BMO Hong Kong banks ETF, which is also the first one in Hong Kong to invest in Hong Kong-listed bank stocks with a potential for attractive dividend yield, to be paid out twice a year. It tracks the Nasdaq Hong Kong banks index through a full replication strategy. This ETF will provide investors access to 10-20 banks in one single trade, as well as exposure to a key economic sector that is a proxy for the growth of the Greater China economies.

The third ETF, the BMO Asia high dividend ETF, seeks to track the Nasdaq Asia, ex-Japan, dividend achievers index, which consists of more than 150 stocks that offer sustainable, attractive dividends in Asia, outside of Japan. It is one of the very few high dividend yield ETFs that provides a broad equity exposure and generates regular income with potential for long-term capital appreciation.

BMO Asia USD investment grade bond ETF is the first ETF in Hong Kong that tracks the Barclays Asia USD investment grade bond index, while the BMO Hong Kong bank ETF and the BMO Asia high dividend ETF are the first ETFs that track Nasdaq indices in Hong Kong. It is anticipated that these ETFs will be listed on the main board of the Stock Exchange of Hong Kong on November 13.

"In a low interest rate environment, the demand for income and growth may not be met by fixed income investments alone," says Prakash. "Dividend-paying stocks offer a competitive yield and growth potential. Investors can capitalize on the rapid development of Asian capital markets and tap the growth story in the region."