Active exchange-traded funds have grown strongly in Asia Pacific since the first fund in the region was launched in Australia in 2015.
Several jurisdictions, including Korea, Hong Kong and Taiwan, have embraced the trend over the past 11 years, contributing to a highly diverse industry landscape.
Australia, which launched the Fidelity Global Emerging Markets Fund active ETF, continues to lead the way with a supportive regulatory environment. Meanwhile, Taiwan’s active ETF market, just one year old, is rapidly gaining traction as the funds’ transparency and liquidity ramps up interest, especially among retail investors.
According to figures from Morningstar Inc, net inflows into major active ETF markets in Asia Pacific surged 133% to US$7.25 billion in the first quarter of this year from $3.11 billion in the same period of 2025. Assets jumped 75.89% to $74.56 billion over the 12 months to March 2026.
Australia has been at the forefront of the growth, thanks to a “fairly quick” regulatory approval process, says Sophia Kim, head of Xtrackers Sales Asia Pacific at German asset manager DWS.
Australian regulatory bodies mainly focus on investor protections such as compliance, liquidity and disclosure, and regulators, exchanges and industry participants maintain close communication. It’s an ecosystem that is “highly efficient for active ETF issuance”, according to Kim.
She notes that market practices in Australia are also better developed compared to most Asian jurisdictions, with active ETFs integrating well into wealth management. Australian issuers also regularly provide training and education to wealth intermediaries.
Trading flexibility
Taiwan’s first active ETF – Nomura Taiwan SMART Select Active ETF – was launched in May 2025. There are now 25 active ETFs listed on the local bourse, issued by 25 local and foreign asset managers.
Rahul Bhalla, head of Asia ETF distribution at US asset manager Franklin Templeton, says retail investors account for 70% of ETF investments on the island.
These investors favour ETFs and active mutual funds and tend to trade frequently, making them a major driving force behind the growth of active ETFs. Their familiarity with ETF structures gives them an accessible way to invest in new products through a format that they already understand.
“This has attracted both domestic and global issuers to launch active ETF offerings in the market,” Bhalla says.
According to Bhalla, active ETFs are becoming more popular than traditional mutual funds in Taiwan, particularly among young investors.
“Active ETFs offer the advantage of combining active management with trading flexibility, making them especially attractive to digitally engaged, frequently trading younger investors who like to time the market,” he explains
Traditional mutual funds have historically been sold through distribution channels that rely on retrocession fees, which influence product promotion. Moreover, these funds are priced only once a day based on net asset value and cannot be traded intraday, making them less attractive compared to active ETFs, Bhalla says.
China stays cautious
But China, the third largest ETF market in Asia Pacific, has yet to join the active ETF trend. There are several reasons for this, according to Sherry Si, a partner at Shanghai YaoWang Law Firm.
For one, Chinese regulators are concerned about market volatility and liquidity risks. Si says if active ETFs hold stocks that are less liquid and face large inflows or outflows, it could lead to pricing distortions, wider premiums or discounts, and greater volatility.
Investor protection is also a key concern for regulators in China because active ETFs can involve risks related to strategy, trading and price premiums and discounts, and regulators worry about speculative trading.
Active managers also rely heavily on research, stock selection, and proprietary strategies to generate returns. If they have to disclose portfolios too frequently, competitors might copy or front-run their strategies and reduce their competitive advantages.
“Some overseas markets have semi-transparent or non-transparent active ETF models, but such systems are not yet fully established in China,” Si says.
