Meeting Asia’s demand for a stronger ETF market
The year 2020 saw Asia’s ETF market experiencing strong growth, both in terms of the number of products and assets under management. For Nasdaq Indexes, winner of the Asia Asset Management 2021 Best of the Best Award for ETF Index Provider of the Year in ASEAN and a merit award for Asia, it was signalled by an increased popularity from investors in the region of its Nasdaq-100 Index, one of the most popular equity indexes in the US. It also saw the launch of a number of ETFs by the company, including the TradePlus DWA Malaysia Momentum Tracker ETF in partnership with Affin Hwang Asset Management, designed to trade the Nasdaq Dorsey Wright Technical Leaders Malaysia Index.
“I think [our] success is due to close collaboration with key asset managers in the region which enables us to offer efficient, yet cost-effective investment tools to investors,” says Nasdaq Indexes’ head of Asia Pacific, Joyce Ip.
Across the region, some significant milestones have been achieved, not least the launch of the Nasdaq-100 futures contract in Taiwan in 2019, the first of its kind outside the US. Mid-2020 also saw one of Australia’s Nasdaq-100 ETF series hit the A$1 billion (US$788.4 million) mark, a local Taiwan asset manager linking its widest thematic range of ETFs to Nasdaq’s tech indexes, and the success of local Hong Kong asset managers fuelled by Nasdaq-100 Leverage & Inverse ETFs.
“In Taiwan, which is one of our key markets in APAC and one of the most developed ETF markets in the region, we work closely with asset managers to offer thematic ETFs for local investors to tap the global potential of the semiconductor, cybersecurity, AI and robotics sectors. We also empower local asset managers’ success and work to ensure that the investors can tap into the potential of the power of today’s global economy,” she explains.
Nasdaq has been working with several issuers in the China market to provide investors with access to a number of indexes including the Nasdaq-100. For offshore products, Ip believes that the market still has much room to grow in terms of product diversification and local investors are likely to be interested in investing into thematic sectors which they are most familiar with, for example biotech and cloud computing. The company has also gained tremendous interest in Japan with the launch in September 2020 of two ETFs tracking the Nasdaq-100 index.
“Demand from the market has been accelerated by the global trend of investing into technology and companies from the top performing industries. In Japan, this means that while assets under management are still focused heavily on domestic products, we are happy to report that growth in the AUM of Nasdaq-100 ETFs in 2020 was five times that compared to that of December 2019.”
Investment trends
Nasdaq’s commitment to designing powerful and relevant indexes in sync with a constantly changing market environment is also clear in the TradePlus DWA Malaysia Momentum Tracker, Malaysia’s first momentum smart beta ETF launched in collaboration with Affin Hwang Asset Management in July 2020. As an investment tool that combines the performance of the Nasdaq Dorsey Wright Technical Leaders Malaysia Index with the asset manager’s suite of passive investment solutions, it marks the first in the rollout of Nasdaq Dorsey Wright solutions across the region.
As the mastermind behind the index, Dorsey Wright has developed a transparent, rule-based and time-tested methodology focusing on relative strength analysis. The methodology has been applied from broad market insights to portfolio management tools and investment models as well as indexes under the Nasdaq Dorsey Wright Technical Leaders Indexes since 2007.
“Since 1987, Nasdaq Dorsey Wright has been a research provider to financial professionals and investors around the world. Today, financial advisors and institutions around the world depend on us for our technical markets, insights and powerful investment solutions,” explains Jay Gragnani, head of research and client engagement at Dorsey Wright.
Ip concludes that the key development for Nasdaq over the next couple of years will be to work more closely with clients to continue to expand its suite of thematic tech indexes and investor education across the region.
“Issuers in general now have a more developed easy-to-access online platform and more investors have access to online brokers. Ultimately, our aim is to continue to bring more new ideas to the APAC region, which will support asset managers and help local investors tap the potential of the economy and protect and grow their assets.”