Asian investors prefer physical ETFs

SpreadsheetThe majority of Asian investors, excluding those from Japan, prefer exchange-traded funds (ETFs) that physically replicate portfolios, according to a survey by Morningstar ETF Centre.

Of those surveyed, 63% said they preferred physical replication to synthetic construction which involves derivatives.

“Interestingly, the individual investors who participated in our survey appeared to be more receptive to using synthetic replication ETFs than the professional investors who took part,” a summary of the findings said.

“Of those surveyed, 22% of current individual ETF investors stated a preference for synthetic replication versus just 8% of current professional ETF investors.”

Equity ETFs, especially country-specific ones, are more popular than fixed-income ones. Morningstar’s analysts said this was particularly obvious amongst professional investors.

Strategy-based ETFs appear popular amongst individual investors, with 56% of individual respondents telling Morningstar that they would likely hold ETFs tracking strategy indices in their portfolios.

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