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Asia: active vs passive investment
27 March 2012
ETFs are gaining traction with Asian investors, but core holdings will remain in active management for quite some time due to regulation and impressive performance. Paul Golden reports
The growing interest of Asian investors in exchange traded funds (ETFs) relative to traditionally more popular active funds has led Asian regulators to take a keen interest in certain passive investment strategies, especially synthetic funds.
Last August Hong Kong’s Securities and Futures Commission (SFC) announced measures to enhance the level of collateral of domestic synthetic exchange traded funds (ETFs) to remove uncollateralised counterparty risk exposure arising from the use of financial derivatives to replicate index performance.
In January, Singapore introduced a rule requiring investors to pass a financial knowledge test before they can buy ETFs or other “specified investment products” if they don’t possess certain educational qualifications or have relevant work or trading experience.
Despite these moves, Celent analyst Anshuman Jaswal says Asian institutional investors are opting for ETFs in markets such as Hong Kong, Singapore, Japan and Korea. “In Hong Kong, for example, institutional investors account for...
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