BBH Greater China ETF Investor Survey reveals that the region continues to outpace global ETF growth as investors manage market risk and volatility

Demand grows for active ETFs as well as for ETFs offering downside protection

HONG KONG,May 21, 2025/PRNewswire/ -- Exchange Traded Funds (ETFs) continue to grow inGreater Chinain 2025, with the region accounting for 71% of the overall record-breaking inflows of$347 billioninAsia-Pacificin 2024^[1]. The findings of the 8th Annual Greater China ETF Investor Survey from Brown Brothers Harriman& Co. (BBH), a global leading ETF custodian and administrator, show that during a time of unprecedented market dislocation and uncertainty, investor appetite for ETFs offering downside protection, such as buffered ETFs, is trending upwards. The region's allocators are also registering increased demand for active ETFs.

The Annual Greater China ETF Investor Survey, which is a subset of itsGlobal ETF Investor Survey, represents the opinions of 100 ETF investors from mainlandChina,Hong Kong, andTaiwan, where 53% of respondents manage overUSD$1 billionin assets and of which, 29% have more than 50% of their portfolio invested in ETFs (compared with 24% globally).

"The outsized growth inGreater Chinademonstrates the strength and depth of the market. As the regional ETF markets have matured and developed, investors are deploying an increasing amount of capital to ETFs. While local ETF issuers have a strong position acrossGreater China, there are opportunities for international ETF issuers too. To thrive inGreater China, international ETF issuers need to understand the local market nuances,"saidChris Pigott,Asia Headof ETF Services at BBH.

Key findings:

Greater China– The region leads the overall Asia-Pacific ETF growth

• Outsized growth of ETFs in Greater China vs global growth:Appetite for ETFs is particularly pronounced inTaiwanandHong Kong, where 27% and 23% of allocators respectively have ramped up their ETF holdings by more than 25% in the last five years.
• Active ETFs gaining traction:All respondents plan to increase their exposures to active ETFs in the next 12 months, 40% of investors in bothHong KongandTaiwanare planning to bolster their active ETF holdings by more than 25%.
• Reallocations to fund active ETFs:22% of ETF investors said they would reduce their exposures to index-based ETFs, followed by actively managed mutual funds (19%) and actively managed SMAs (15%).
• Reasons for adopting ETFs:35% of ETF investors are looking for long-term portfolio growth through core exposures. 32% want to provide portfolio outperformance through tactical, niche or narrow/sectors of the market. 20% are looking to manage risks, volatility, and downside protection. Just 13% are buying ETFs in order to generate income.
• Defined outcome leads the way:29% of Greater China ETF investors plan to invest in defined outcome – or buffered ETFs – over the next 12 months, rising to 34% in mainlandChina. 27% plan to invest in fixed income.
• Increased focus on cryptocurrency ETFs:26% of investors intend to buy cryptocurrency focused ETFs in 2025, withTaiwan(40%) andHong Kong(23%) leading the way.

MainlandChina– Investors are positive on increasing exposure to ETFs

• Demand for offshore assets remains strong, with mainlandChinainvestors being net buyers ofHong Konglisted ETFs through the Southbound channel in 2024^[2].
• Mainland investors are most interested in buffered ETFs (34%) and ESG products (20%) if they are going to buy ETFs listed on HKEX in the next 12 months.
• 40% of investors plan to fund new ETF purchases by redeploying capital from other ETFs.

Hong Kong– Tax efficiency is an important component of the total cost of ownership that investors are increasingly evaluating

• Hong Kongis one of the most diverse ETF markets inAsia, with flows driven by product innovation, both from the local regulator and the stock exchange.
• While demand for fixed income is on the rise, it is much more sought after inHong Kong, where 34% of allocators plan to invest in the strategy.
• 34% of investors expect the dominance of the Magnificent Seven stocks to continue – this is above the overall response of 26% forGreater China.
• Tax efficiency is the most important consideration for ETF investors (26%) inHong Kong.

Taiwan– One of the fastest growing ETF markets in the world, the launch of active ETFs paves opportunities to asset managers

• 23% of ETF investors inTaiwanare reallocating from active mutual funds in order to grow their ETF allocations.
• Demand for the launch of active ETFs is high, with 37% and 27% of investors planning to allocate to equity and liquid alternative active ETFs respectively.
• Structured products, i.e. Collateralised Loan Obligations (CLOs) are popular, with 23% of allocators planning to gain exposure to the asset class in 2025.
• Taiwanleads the way for cryptocurrency, with 40% of ETF investors intending to buy cryptocurrency focused ETFs in 2025.
• Greater Chinaallocators are incredibly bullish on Artificial Intelligence (AI), with 31% saying it will be major investment trend for 2025. This rises to a staggering 60% inTaiwan.

Read the full report here:2025 Greater China ETF Investor Survey.

About Brown Brothers Harriman

Brown Brothers Harriman (BBH) is a global financial services firm known for premium service and specialist expertise. We have a 200-year track record helping clients innovate and navigate complex financial markets. Our 6,000 employees serve clients and their investments in over 90 markets across BBH's 18 offices. As a private partnership, we are uniquely built to put clients first and create success that lasts.

BBH Investor Services is a leading provider of asset servicing and operating model solutions to global asset managers and financial institutions. Our asset servicing solutions include custody, global tax services, depositary and trustee, accounting, administration, transfer agency, and foreign exchange. Our operating model solutions solve platform, data, and connectivity challenges across open-architecture operating models. We support our clients'growth, enhance operational efficiency and resiliency, and streamline reporting and oversight. For more information, please visitwww.bbh.com.

References to specific types of securities and asset classes are for informative purposes only and are not intended to be and should not be interpreted as recommendations.

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