Vanguard, the world's largest manager of mutual funds and the second-largest provider of exchange-traded funds (ETFs), has launched the first S&P 500 ETF listed on the Hong Kong stock exchange.

The company aims to deepen its presence in the city with the launch of Vanguard S&P 500 Index ETF, its fifth ETF in Hong Kong since it first entered the market in May 2013.

In Hong Kong's ETF market, dominated by China-focused products, Vanguard's broad-based global funds have barely made a dent. Shelly Painter, regional managing director for Asia, says that the key to the development of the market is education. "The market is still very new not only to indexing but also to ETF product itself," she says. "We expect it will take some time for the product to take off."

While the trend of moving away from actively-managed investing towards passive, index-based is pronounced in North America and Europe, it hasn't yet taken hold in Asia. "One of the challenges we'll face is teaching people the difference between trading and investing," says James Norris, managing director, Vanguard International.

Together with the FTSE Developed Europe Index ETF, FTSE Asia ex Japan Index ETF, FTSE Japan Index ETF and FTSE Asia ex Japan High Dividend Yield Index ETF, the five Vanguard funds cover 2,200 stocks, or close to 80% of the global equity universe by market capitalization. The new ETF's total expense ratio is 0.25%, while the average for the family of funds is 0.32%.

The new fund, trading under the stock code 3140, offers full physical replication of the underlying index, in Hong Kong dollars, with a minimum lot size of 100 shares, or HK$ 1,500 at the nominal price on the opening day.

One could question the timing of launching a broad US equity ETF after a prolonged period of bull market when further upside is uncertain.

But Norris says long-term investors shouldn't be concerned with timing. The key to successful investing is staying in the market and disciplined rebalancing. "If you're a long-term investor, then the best time to invest in the US S&P 500 index fund is today," he says.

Vanguard has been providing investment services to institutional clients in Hong Kong since 2011, offering its products listed in the U.S. or Europe. The five Hong Kong-listed ETFs constitute the company's foray into the territory's retail investment space, to which it wants to bring its philosophy of purposeful, disciplined, diversified, long-term and low-cost investing.