Asia-listed ETFs suffer sharp sell-off in March

Apr 11, 2012

iShares takes the most net new money into its Asia-Pacific ex-Japan-listed exchange-traded funds in the first quarter, at the expense of firms such as Polaris and State Street Global Advisors.

Asia-listed ETFs suffer sharp sell-off in March

Exchange-traded funds listed in Asia-Pacific ex-Japan saw net outflows of $604 million in March, resulting in $486 million in first-quarter net redemptions for the region's ETF industry.

That compares to ETFs globally taking in a net $58.7 billion in the same period, well up on the $38.7 billion in Q1 2011, according to research firm ETF Global Insight (ETFGI). This suggests Asia-based investors continue to prefer to buy ETFs listed outside their home region.

BlackRock’s iShares exchange-traded funds unit experienced the biggest net inflows ($442 million) in Asia-Pacific ex-Japan, bucking the regional trend. The next most successful player, Hanwha Investment Trust Management, attracted $165 million in net flows. Another Korean firm, Kyobo Axa Investment Managers, came in third with $131 million.

However, Taipei-based asset manager Polaris suffered the biggest net redemptions of all ETF providers globally in the first quarter of $975 million. That represented more than a fifth of its total ETF assets, which stood at $3.7 billion as of March 31. The outflows were largely accounted for by the $1.09 billion in net sales of its most popular product, the Polaris Taiwan Top 50 Tracker.

The firms seeing the next biggest Asia-Pacific ETF first-quarter redemptions were State Street Global Advisors' SPDR range ($238 million in outflows) and HSBC/Hang Seng ($173 million).

Still, SPDR ETFs remains easily the biggest provider by assets in Asia-Pacific ex-Japan, with $12.6 billion and a 20.6% market share, followed by iShares ($7.8 billion) and HSBC/Hang Seng ($6.6 billion).

In the first quarter, net new money was broadly going into fixed income and out of equities, says Deborah Fuhr, partner and co-founder of ETFGI.

iShares benefited in particular from the breadth and depth of equity and fixed-income ETFs in the US and Europe and from investors’ preference for ETFs that invest in underlying securities, Fuhr tells AsianInvestor. She cites the firm’s 539-strong range of ETFs, as against, for instance, SSgA’s 155.

For March, iShares gathered the largest net inflows with $78.7 million, followed SPDR ETFs with $75.8 million and BOCI-Prudential Asset Management with $62.1 million.

Meanwhile, Samsung Investment Trust Management experienced the largest net outflows in March, with $285 million. The biggest single loser product-wise was the Samsung Kodex Leverage ETF with $323 million in outflows, whereas the Samsung Kodex Inverse ETF took in $182 million – clear indicators of the bearish sentiment in Korea.

Still, the number of ETFs in Asia-Pacific ex-Japan region continued to rise, with 37 new funds listed in the first quarter, bringing the total number in the region to 347, with assets of $58.4 billion.