ETFs are increasingly being used to gain exposure to Chinese equities and bonds, according to new research which asked the views of 150 European institutional investors and wealth managers with a combined AUM of $292.8bn.
Over three quarters (78%) expect to see an increase in the use of ETFs to access Chinese asset classes over the next three years.
The study was carried out by NTree International on behalf of investment manager China Post Global.
Our research shows the growing demand for Chinese asset classes among institutional investors but also a desire for specialist, innovative products such as ETFs."
When asked why they think the use of China focused ETFs will increase between now and 2024, 67% of institutional investors said that they provided a more specialist and niche exposure to Chinese equities and bonds.
A further 60% said it is because there is greater innovation in the ETF marketplace, over half (55%) said that they are more competitive than mutual funds, and 54% said that their liquidity is expected to improve.
The research also highlighted the growing interest in Chinese capital markets, with three quarters (75%) of institutional investors expecting foreign investment into Chinese equities to increase and 63% expecting foreign investment into fixed income to increase.
Tim Harvey, CEO at NTree, comments: "Our research shows the growing demand for Chinese asset classes among institutional investors but also a desire for specialist, innovative products such as ETFs which can provide access at more competitive prices."
Danny Dolan, director at Market Access, said: "This strong demand for China exposure among European institutional investors is no surprise, given the excellent performance of the Chinese equity market since early 2020, and the unparalleled bonds yields available in China compared to other major economies."
NTree commissioned the market research company Pureprofile to interview 150 professional investors -institutional investors and wealth managers - across the UK, Switzerland and Germany.
The survey was conducted online in February 2021.