Exchange-traded fund (ETF) providers could look back at 2021 as a year plagued with uncertainties. The impact of the pandemic, escalating geopolitical tensions, regulatory changes in Hong Kong and China, and credit defaults China's real estate sector continued to affect market sentiment.
Still, global ETFs saw record inflows of US$1.22 trillion, up 71% from the previous year, with Asian ETFs drawing US$88 billion. Leading ETF providers did their best to showcase their capabilities, but the challenging market conditions did affect their performance.
This became apparent during the evaluation process for The Asset Triple A Best ETF Awards 2022. Data collated and assessed by our board of editors indicated relative weakness of ETFs based on their respective tracking errors.
Tracking error, which shows the deviation between the returns of a particular ETF and its benchmark index, gives an indication of how well the ETF performed and how well the fund manager did their job in tracking the index. The tracking error also allows investors to compare the ETFs’ performance on an apple-to-apple basis.
Essentially, the lower or closer to zero the tracking error is, the better the performance of the ETF. Put in another way, the lower an ETF’s tracking error is, the more money it is making for the investors.
This is important for investors because the fees charged by the ETF fund managers can eat substantially into the earnings of the ETF.
For this year’s awards, about 100 ETFs were submitted for evaluation by around 20 ETF managers operating in the following markets: Asia, Australia, China, Europe, Hong Kong, Japan, Malaysia, the Philippines, Singapore, and Taiwan.
During the awards period (January – December 2021), the best average tracking error for ETFs was posted by Japan at 0.08%, followed by Singapore at 0.26%, Australia 0.30%, Hong Kong 0.90%, and Taiwan 1.10%. This means that ETFs from Japan, Singapore, and Australia are better in matching the benchmark index closely than their peers from Hong Kong and Taiwan based on their average tracking error during the period.
In most cases, ETF fund managers do not make the tracking error of their products publicly available unless investors request for it. For example, it is not published on an ETF’s fact sheet, which most investors use as source of information.
This notwithstanding, the ETFs submitted for consideration for this year’s awards posted an average 40% growth in assets under management (AUM), indicating that ETFs remain popular as an investment instrument.
The variety and range of capabilities, strategies and innovation exhibited by these ETFs also highlight the efforts of their providers to meet the specific needs of investors and capture the opportunities from current and emerging trends in the market.
It is in this context that The Asset announces this year’s Triple A Best ETF Providers.
Melody He, deputy chief executive officer of CSOP Asset Management, is also honoured with the ETF Leadership Award.
The Best ETF Providers
Asia
Yuanta Securities Investment Trust
Yuanta Securities Investment Trust retained its position as the leading ETF manager in the region during the awards period with a total of 49 ETFs and total AUM of NT$622 billion (US$22.5 billion), a year-on-year growth of 20% and a market share of 30% in Taiwan, despite consolidating its business. It is also proactively bolstering its digital capabilities and continues to be a leader in ETF innovation, integration, and internalization of new strategies such as mega trend investing as well as thematic investing in the metaverse, carbon neutrality and green bonds.
Australia
BetaShares (Winner)
BetaShares remains the leading local ETF provider in Australia, posting a 46% growth in AUM to US$22 billion during the awards period, the fourth largest in terms of AUM following Vanguard, Ishares Blackrock, and SPDR State Street. BetaShares posted consistently low tracking errors for all its products despite the challenging market conditions. It is also a market leader in sustainability investing.
VanEck (Highly Commended)
VanEck's its AUM grew by 58% to US$9.6 billion. In addition, its flagship ETFs outperformed their market capitalization equivalents. Compared to its primary index, the tracking error is among the lowest in the market. VanEck also continued to win considerable assets from a range of clients including institutions and high-net-worth investors, with offshore clients in Singapore, Taiwan and Hong Kong investing in a range of ETF exposures.
China
China Asset Management
China Asset Management Company (ChinaAMC) is the biggest ETF manager in China, accounting for 22% of the domestic equity ETF market and ranking number one among domestic fund companies. It posted a 43% growth in AUM to US$50 billion in 2021. ChinaAMC launched 73 ETFs and 31 ETF feeder funds with the most extensive range of ETF products in the China market.
Hong Kong
CSOP Asset Management (Winner)
Despite tough market conditions, CSOP Asset Management (CSOP AM) achieved a more than 11% AUM growth to about US$11 billion in 2021. CSOP AM launched 10 products during the year, including innovative products for the China-Hong Kong cross-border market and the real estate investment trust (Reit) market in Singapore. The company’s ETFs posted relatively low tracking errors.
Mirae Asset Global Investments (HK) Limited (Highly Commended)
Mirae Asset Global Investment HK is one of the most active in terms of issuing new ETF products in 2021, bringing the total number of Global X ETF offerings to 24 products listed on Hong Kong Stock Exchange. The firm is still in the process of building its business in Hong Kong, posting AUM of US$2.47 billion by the end of the year.
Japan
Nikko Asset Management
Nikko Asset Management (Nikko AM) remains the biggest ETF manager in Japan with 20.06% market share and AUM of 12.5 trillion yen (US$95.8 billion) as of December 2021. Nikko AM is also expanding its ETF business by launching products in Hong Kong and Singapore. Its products delivered good performance based on their low overall tracking error.
Malaysia
AmInvest
AmInvest has the largest ETF in the domestic market. It has about 1.6 billion ringgit (US$361.4 million) in AUM, accounting for a 77% market share. Its AUM increased by around 21 million ringgit in 2021, compared with the Malaysian ETF industry’s overall decline of around 68 million ringgit over the same period. Despite the difficult market conditions, its ETF products performed well based on their low tracking error.
Philippines
First Metro Asset Management
Despite the impact of the pandemic, First Metro Asset Management (FMAM) saw its ETF end the year with positive net sales following a 14% decrease in net sales in 2021 vs 2020. The fund also benefited from lower redemptions which dropped to 35%, resulting in total net sales of 262 million pesos. Performance is good based on the low tracking error.
Singapore
Nikko Asset Management
Nikko Asset Management (Nikko AM) is the largest ETF issuer in Singapore, posting AUM growth of 11% to US$2.2 billion for the year. For the period between 2016 and 2021, AUM recorded a compound annual growth rate (CAGR) of 25%. Nikko AM has one of the most extensive ETF broker networks in Japan and its products are popular among retail investors.
Taiwan
Cathay Securities Investment Trust (Winner)
Cathay Securities Investment Trust (Cathay SITE) launched 39 ETFs during the awards period, three of which were denominated in US dollar. Total AUM grew by 20% to NT$335.5 billion in 2021. The number of its ETF beneficiaries also grew almost 1.4 times to 853,547, ranking it No.1 among all issuers in Taiwan. Cathay SITE has also launched innovative products.
CTBC Investments (Highly Commended)
CTBC Investments expanded its ETF business during the year, posting AUM growth of 25% to NT$12.8 billion. CTBC climbed up the rankings to be the largest China equity ETF manager, the third largest bond ETF manager, and the fifth largest in the overall ETF market in Taiwan.
Best ETF Market Maker
Asia
Jane Street
Jane Street’s global trading volumes surpassed US$20 trillion in 2021, over US$3.8 trillion of which was represented by ETFs, averaging US$16.8 billion per day. It also continued to expand its official market-making operations across Asia. In Hong Kong, it became a designated specialist at the end of 2020, providing liquidity to over 44 ETFs. It currently trades and prices most Hong Kong-listed ETFs and across all regions. In 2021, Jane Street seeded over 20 new ETF listings in Asia.
Taiwan
Yuanta Securities (Winner)
As Taiwan’s leading ETF market maker, Yuanta Securities signed liquidity provision agreements with 13 ETFs issuers and offered market liquidity for 165 of the 223 ETFs in Taiwan, including 12 ETFs that had be delisted in 2021. Yuanta’s market share of the annual trading value was 14.4%, ranking first among all market makers.
SinoPac Securities (Highly Commended)
In 2021, SinoPac Securities offered ETFs liquidity in the listed and over-the-counter markets. It subscribed to all of the 19 IPO ETFs in 2021 with total subscriptions amounting to US$38.3 million. This is three times higher than the previous total in 2020.
Best ETF Broker
Taiwan
Yuanta Securities
Yuanta is the only brokerage in Taiwan's capital market with a double-digit market share at 13.14% in 2021. This is 1.23 percentage point higher than its closest competitor. The firm has over 400 million clients and a yearly average of 900,000 active accounts, the biggest in the market. It also has the largest network with 146 brokerage locations all over Taiwan.
Best ETF Participating Dealer
Taiwan
Yuanta Securities (Winner)
Yuanta Securities has signed participating dealer agreements with all ETF flagship products listed on the Taiwan Stock Exchange, making it a market leader in this respect. During the awards period, Yuanta Securities’ overall creation market share was18.4%, while its redemption market share was 18.7%.
Fubon Securities (Highly Commended)
In 2021, Fubon Securities was the participating dealer for 18 of the total 19 ETFs launched in the market. Also, the size of positions Fubon Securities holds has also grown sequentially, from about NT$300 million in 2019 to about NT$2.5-3.0 billion in 2021. About 70% of its US$4.6 million profit in 2021 came from ETFs.
Best ETF Custodian – Asia
HSBC Securities Services
HSBC Securities Services (HSS) is the most widely used custodian among the ETF providers who participated in this year’s awards. HSS remains well-regarded for its capability to service all types of ETFs, including traditional ETFs, leverage and inverse ETFs, cross-border ETFs, thematic ETFs, smart beta ETFs, etc. Its highly automated and digital platform was well-tested during the pandemic.
Best Index Provider for ETFs
Asia
FTSE Russell (Winner)
FTSE Russell launched 11 products during the award period, providing investment solutions for various markets across Asia-Pacific. Globally, 22 of the top 25 ETF providers with US$663 billion ETF-linked assets were benchmarked to FTSE Russell indices. FTSE Russell is also one of the top providers of ESG indices for ETF products in Asia. Its indices were also used as benchmark for innovative ETF products in the region.
S&P Dow Jones Indices (Highly Commended)
In 2021, over 200 Asia-listed exchange-traded products (ETPs) were linked to S&P DJI indices. That represented US$54.9 billion in AUM, an increase of 27% from US$43.3 billion in December 2020.
Best Index Provider for ETFs, Thematic
Qontigo
In 2021, Qontigo indices were used as benchmark for thematic ETFs by providers in Australia, China, South Korea and Taiwan. Qontigo’s AUM grew by 23% after remaining stable in previous year amid the pandemic.
Best Index Provider for ETFs, China
China Securities Index (Winner)
In 2021, the number of Asia-Pacific ETFs tracking CSI-managed indices increased by 80% to 524 ETFs. Total AUM increased by 40% to 948 billion yuan (US$141.4 billion). Of the 598 ETFs listed in China, 467 tracked CSI-managed indices, 30% more than in the previous year. There are 57 ETFs benchmarked to CSI-managed indices in Asia-Pacific and Middle East markets.
Shenzhen Securities Information (Highly Commended)
Shenzhen Securities Information (SSI) has licensed a total of 173 index products with aggregate AUM of over 166 billion yuan by the end of 2021. Nine index products were listed on overseas markets including the United States, South Korea, Hong Kong and Taiwan, with aggregate AUM of over 2.5 billion yuan.
Please click here for the full list of winners of The Asset Triple A Best ETF Provider Awards 2022
Please click here for the full list of winners of The Asset Triple A Most Innovative ETFs and Sustainability ETF Awards 2022
To participate in the awards ceremony, please contact [email protected]
