Asian insurers turn to equity ETFs for beta exposure

Insurers are exploring ETFs as a way of circumventing sector limits and increasing diversification. So far, the greatest demand is for equity exposure, but fixed-income ETFs are also starting to feature on insurers’ wish-lists. Justin Lee reports

Insurers operating in Asia are faced with unique challenges: low yields combined with a lack of investment grade long-dated fixed-income assets means they are often forced to look beyond traditional bonds and equities into other investment products such as mutual funds, structured products and exchange-traded funds (ETFs).

Recognising this challenge, the Indian insurance regulator, the Insurance Regulatory and Development Authority, has now allowed Indian insurers to invest in equity ETFs