Asia’s high net worth investors have either shunned ETFs or simply traded them like equities, to the dismay of providers who believed that the product could play a more central role in investing. A gap existed between issues like liquidity and how to implement the product in a portfolio. iShares was determined to change this.Firstly, iShares has developed a comprehensive ecosystem and constructed infrastructure behind ETFs to ensure efficient pricing, trading and, effectively, improved liquidity – a critical determinant for a clientele that has had bad experiences with locked-up money. The deepening of liquidity also extended to UCITS European ETFs, where private banks in Asia displayed an appetite for the passive vehicle in unfamiliar markets.
“As liquidity in the European ETF market has deepened, and awareness regionally has developed, these products have been more widely adopted by Asia-Pacific private banks for use within their own structures,” notes Susan Chan, head of Asia Pacific, iShares. “Partly because these are typically UCITs-registered and also because of the potential tax advantages available in UCITs products over US-listed counterparts.”
Clients in the region have long treated ETFs as a trading vehicle, not dissimilar to a stock, to buy and sell the market in short spurts. Chan and her team have made efforts to educate the region’s private banks about the versatility of ETFs and how it can be used in various scenarios. It covered topics ranging from trading advice to implementation of investment themes, and tactical strategies through the product, focusing on a community that wants to deliver the Holy Grail of private banking, discretionary portfolio management.
“ETFs are an extremely useful tool for discretionary managers at private banks as they allow for both low cost and convenient implementation of tactical investment strategies, as well as strategic allocations in niche areas or those in which the private bank might not have resource and expertise,” Chan says. “We have seen private banking develop as a channel in Asia in this regard, and we may see further adoption by other private bankers who emulate the fee-based advisory models that are becoming increasingly prevalent in Europe.”
iShares accomplishments in providing a broader range of products to the market and deliver solutions that reach into the enclaves of discretionary mandates did not go unnoticed as gatekeepers made their opinions heard. Asian Private Banker proudly presents the title of Best Fund Provider – ETF to iShares.