Lack of rebate fees poses challange to Asia ETF market

High-net-worth and retail investors in Asia represent a much smaller slice of the exchange-traded fund investor base than they do in the US or Europe. With no rebate fees available to the private banks and brokerage houses that dominate regional distribution channels, how will product providers achieve market penetration? Joti Mangat reports

Although no accurate data exists, most exchange-traded fund (ETF) providers and distributors agree that the 30% growth achieved by the Asia Pacific ETF market in 2010 was driven mostly by institutional demand, with high-net-worth and retail buyers accounting for between 10% to 20% of notional sales, depending on who you ask.

Wealth managers in the major regional markets of Japan, Hong Kong and Singapore suggest several reasons for this dynamic, including low levels of product awareness and