FT: Hedge fund managers bearish on Asia ETFs

(FinancialTimes) The exchange traded fund market in Asia will not follow the same evolutionary path as the US and European markets, according to Mark McCombe, chairman of BlackRock’s Asia Pacific business.

The developed ETF markets “provide pretty much everything people need”, he said in an interview with FTfm.

Asian institutions, such as hedge fund managers, are more likely to use established international products that offer deeper liquidity and a low tracking error. “No one will come and say they would prefer to buy a local product; it just doesn’t work that way because the majority of flows in Asia remain institutional,” said Mr McCombe.

According to Investing Answers, Exchange-traded funds (ETFs) are securities that closely resemble index funds, but can be bought and sold during the day just like common stocks. These investment vehicles allow investors a convenient way to purchase a broad basket of securities in a single transaction. Essentially, ETFs offer the convenience of a stock along with the diversification of a mutual fund.

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