With traditional assets performing poorly for most of 2023, retail investors in the Asia-Pacific region embraced the exchange traded funds (ETFs), resulting in massive inflows into this passive asset class.

The popularity of ETFs is more pronounced in some markets, particularly in Taiwan, followed by Hong Kong and Singapore. Assets invested in the ETF industry in Asia-Pacific ex-Japan reached a milestone of US$746.73 billion at the end of November, beating the previous record of US$717.28 billion at the end of August 2023, according to data from ETFGI.

The assets increased by 29.0% YTD in 2023, going from US$578.72 billion at end of 2022 to US$746.73 billion. Net inflows reached US$18.12 billion in November.

The burgeoning ETF market spurred strong competition, with ETF providers who have a broader suite of products, wider distribution network across the region, and well-performing products jumping ahead of competitors who continued to focus on specific markets. In this respect, Nikko Asset Management, which has established presence in Japan, Singapore, Hong Kong, and China, has lead other Asian ETF providers.

Stronger competition was also evident in the types of new products coming into the market and as well as in the reduction of fees by providers in some markets.

Providers with a stronger and more established platform and better technological capabilities gained an advantage over their less technologically invested peers.

CSOP Asset Management, for example, launched the CSOP Saudi Arabia ETF, with an initial investment of over US$1 billion, making it the largest Saudi Arabia ETF globally.

Betashares also cut its fees for the Betashares Australia 200 ETF, staking its claim as the world’s lowest-cost Australian shares ETF, with a management fee of only 0.04% p.a.

Last year was the 20th anniversary of the development of Taiwanese ETFs. The size of the market has reached a milestone of NT$3 trillion (US$92.08 billion). The trading value of Taiwan ETFs in 2023 increased by 48% from the previous year, boosted by investor interest in the high-dividend ETFs and bond ETFs.

A total of 17 new ETFs were launched last year, including 11 Taiwan equity ETFs and two bond investment-grade ETFs. On average, one out of four people in Taiwan are investing in ETFs. The number of beneficiaries has grown to 9.46 million, investing in 161 ETFs listed in Taiwan, according to TWSE.

The fierce competitive landscape has further intensified with ETF providers with smaller sizes grabbing market share by launching innovative products that attract retail investors in Taiwan. The major battleground last year focused on paying dividends quarterly and even monthly. The dividend rates for ETFs ranged from 5% to 10%. The capability to pay better dividends is considered the most important consideration for retail investors when choosing ETFs, according to ETF providers.

Foreign asset managers are actively planning to further engage with the Taiwan ETF market. Some foreign asset managers without ETF business in Taiwan are in conversation with regulators and local ETF providers as they consider launching products to tap the huge market opportunity.

Going forward, the ETF market is expected to grow further. ETF providers believe that there is still huge potential for the market. The market has already seen a record high in terms of trading volume in March, according to ETF market makers. With this strong momentum, the interest in high-dividend ETFs will continue this year. ETFs investing in overseas markets are expected to further attract investors. Meantime, the market is expecting the launch of the first active ETF in Taiwan in the second half.

Meanwhile, China, the largest ETF market in Asia, has seen a surge in passive investment vehicles amid the recent market downturns, propelling its ETF market to surpass 2 trillion yuan (US$280 billion) in March 2024, up by almost 40%.

It is in this context that we at The Asset announce the winners of the Best ETF Provider Awards 2024 and the Best ETF Products Awards 2024.

Best ETF Provider – Asia, Best ETF Provider – Japan, Best ETF Provider – Singapore

Nikko Asset Management

Nikko Asset Management wins the Best ETF Provider for Asia, Japan, and Singapore. Nikko AM boasts the most extensive distribution network for their ETF products across the region and is particularly strong in Japan and Singapore. Its ETFs performed well during the awards period, a testament to its strong capabilities and track record.

Best ETF Provider – Australia

Betashares

Betashares remains the leading ETF provider in Australia, competing head-to-head with the global providers in that market. The company has an extensive, well-performing product suite, and is cutting fees to make them more affordable for investors. Its Betashares Australia 200 ETF claims to be the world’s lowest-cost Australian shares ETF, with a management fee of only 0.04% p.a.

Best ETF Provider, China onshore

China Asset Management

China Asset Management (ChinaAMC) continues to be the leading player in the onshore Chinese ETF market, demonstrating especially strong position in equity ETFs. Its equity ETF AUM accounted for 25% of the onshore equity ETF market. ChinaAMC launched 12 ETFs in 2023, with broad-based ETFs such as ChinaAMC SSE Science and Technology Innovation 100 ETF gaining traction among investors.

Best ETF Provider – Hong Kong

CSOP Asset Management

CSOP Asset Management maintained its leadership in Hong Kong’s ETF market by launching trail-blazing products. The CSOP Saudi Arabia ETF, with an initial investment of over US$1 billion, makes it the largest Saudi Arabia ETF globally. CSOP AM is also the only ETF manager in Hong Kong that has participated in the "Shanghai-Hong Kong" and "Shenzhen-Hong Kong" ETF cross-listing projects, as well as in China-Singapore ETF Link Scheme.

Best ETF Provider – Malaysia

AmInvest

AmInvest remains the largest ETF provider in Malaysia with AUM of about 1.8 billion ringgit (US$376.75 million) and a market share of 83% out of the ETF industry’s AUM of 2.1 billion ringgit.  Its ETF market share grew from 77% to 83%, 6% higher from the year before with an increase of 132 million ringgit in fund size. Its ETFs have also maintained top performance ratios, a testament to its capabilities and track record.

Best ETF Provider – Taiwan

Cathay Securities Investment Trust 

Cathay Securities Investment Trust tapped the major market trends like high-dividend ETFs and bond ETFs last year, resulting in an AUM growth of 58% in its ETF business. Its ETF beneficiaries climbed 27% from 1,655,723 people to surpass 2,103,360 people during the review period. The major driver for its business growth came from Taiwan equity ETFs, which recorded an AUM growth of 62%.

Best ETF Provider, Taiwan onshore

Capital Investment Trust Corporation

Capital Investment Trust Corporation (CIT) has recorded solid ETF business growth by capturing market trends. The three ETFs it launched last year cover investor demands relating to the semiconductor sector, high dividend payouts, bonds, and ESG, resulting in an AUM growth of nearly 86%. CIT’s ETFs investing in the domestic market have been favoured by the investors. The number of the beneficiaries of CIT’s 21 ETFs grew by 1688% in 2023.

Best ETF Provider, Taiwan offshore

CTBC Investments

In 2023, CTBC Investments (CTBCI) saw ETF AUM increase by 52%. It launched two ETFs last year, covering investors’ interest in ESG and high dividends. In recent years, its ETFs investing in overseas markets, in particular, have been recognized by the investors in Taiwan. The number of the beneficiaries of CTBCI’s 22 ETFs grew by 30.9% in 2023.

Best ETF Market Maker – Asia

Jane Street

Jane Street remains the leading market maker for ETFs in Asia, with trading volumes witnessing exponential increase in 2023. It continues to provide market making in Taiwan, Hong Kong, Australia, and Japan, with additional and growing activity in ETFs listed in mainland China, Singapore, and South Korea. Its strengths lie in trading and seeding ETFs that are more difficult to price, such as regional and global baskets, asset classes like fixed income and commodities, or specialized products like sector-based or thematic ETFs.

Best ETF Market Maker, Taiwan, Winner

SinoPac Securities

SinoPac Securities has aggressively expanded its market making business, with the AUM of its ETFs growing by about 200% last year. Supported by its market maker quote inner system and real-time monitor, SinoPac Securities covers all kinds of bond ETFs and has been actively enhancing its capabilities to provide liquidity to more diversified ETF classes.

Best ETF Market Maker, Taiwan, Highly Commended

Fubon Securities

As one of the major market makers in Taiwan, Fubon Securities has a participation coverage rate of 95% for ETFs listed in Taiwan and provides market making services for more than half of them. The company reported a satisfactory profit for its market making business last year, and is optimistic about expanding its income this year by continuing to improve the hedging strategies and efficiency.

Best ETF Market Maker – Vietnam

KIS Vietnam Securities Corporation

KIS Vietnam Securities Corporation remains the dominant market maker in Vietnam, facilitating transactions for over 90% of local ETFs, with a 41% market share, up by 2% in 2023.

Best Index Provider for ETFs, Asia, Winner

S&P Dow Jones Indices

S&P Dow Jones Indices captured the most relevant trends in turbulent markets, providing relevant strategy to monetize the downside. Examples are Covered Call Strategy Indices aimed at generating income and mitigating loss during bear market conditions, which resulted in relevant ETFs in Australia and Korea.

Best Index Provider for ETFs, Asia, Highly Commended

FTSE Russell

In 2023, FTSE Russell generated AUM growth of 26% to US$10 billion for funds tracking its indices. It launched eight new ETF products launched last year, including the first Saudi Arabia ETF in Asia-Pacific.

Best Index Provider for ETFs, China, Winner

China Securities Index Corporation

China Securities Index continues to be the dominant index provider for ETFs in China, with 651 out of 856 listed ETFs tracking CSI-managed indices, representing a growth of 14%. In other Asia-Pacific and Middle East markets, 62 ETFs are benchmarked to CSI-managed indices. By the end of 2023, there were 713 ETFs tracking its indices in the Asia-Pacific region, about 15% more than the previous year. The aggregate AUM of these ETFs reached 1.44 trillion yuan, a 36% year-on-year growth.

Best Index Provider for ETFs, China, Highly Commended

Shenzhen Securities Information

Shenzhen Securities Information has been developing its index services to deepen the services for ETFs investing into the Greater Bay Area. As of the end of 2023, the number of index products tracking SSI indices surged 22% from the previous year to 235. The AUM of index products grew 29% to a new peak of 246.1 billion yuan.

For the full list of ETF Providers Awards, please click here.

For the full list of ETF Products Awards, please click here.

To join the in-person annual celebratory dinner on June 14 2024 in Hong Kong, please contact [email protected].