Asia Synthetic Equity & Index Strategy ETF Monthly Asia Date 14 November 2017 Deutsche Bank Markets Research ETF Investors take profits as equity markets rally Data in this report is as of 31 st October 2017 Asia listed ETP Monthly Highlights (Assets, Flows & Launches): ■ Assets & Flows: ETP AUM up by 3.2% ($12.8bn) on MoM basis and ended the month at record high level of $416.9bn. Net outflows of -$4.5bn in October (YTD +$41.8bn). ■ 9 new launches: 8 equity and 1 fixed income. Non traditional product launches continue in October with dominance of smart beta ETFs. Investment Themes for the Month Equities (-$5.9bn outflow): ■ Japan (-$3.6bn) - Nikkei 225, TOPIX and leveraged long ETFs saw sizeable redemptions and inflows into inverse ETFs which added to the bearish sentiment. In other segments, we saw notable outflows from dividend ETFs but inflows into REITs. ■ China (-$1.7bn) - Outflows primarily from China A Share indices. Leveraged long and multi-factor strategies also saw material redemptions. However, a selection of sector ETFs (IT, Consumer Staples and Financials) had interest. ■ Korea (-$351mn) - A single ETF tracking leveraged long KOSPI 200 had significant outflows which more than offset inflows into other segments. ■ Taiwan (-$312mn) - Although we observed net negative flows, sentiment was mixed where there were outflows not only from an ETF tracking TSEC Taiwan Top 50 but also from an inverse ETF tracking the same index. Further, there were inflows into low vol and dividend ETFs. ■ Hong Kong(-$247mn), Singapore (+$116mn) - Hong Kong outflow were into HSI while for Singapore investors were interested in Real Estate. Fixed Income (+$1.5bn inflow): China money market ETF segment saw inflows of +$1.4bn. Commodity (-$68mn outflow): Outflow of -$108mn from crude oil based ETFs. Ari Rajendra Strategist +44-20-754-52282 Deutsche Bank AG/London Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1.MCI (P) 083/04/2017. Distributed on: 14/11/2017 14:51:10 GMT 0bed7b6cf11c
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ETF Monthly Asia 14 November 2017 Synthetic Equity & Index ... · accumulated +$116mn inflow driven by one ETF with exposure to high dividend yielding REITs (+$78mn). Fixed income
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14 November 2017
ETF Monthly Asia
Asia Synthetic Equity & Index Strategy
ETF Monthly AsiaDate14 November 2017
Deutsche BankMarkets Research
ETF Investors take profits as equitymarkets rallyData in this report is as of 31st October 2017
Asia listed ETP Monthly Highlights (Assets, Flows & Launches):■ Assets & Flows: ETP AUM up by 3.2% ($12.8bn) on MoM basis and ended
the month at record high level of $416.9bn. Net outflows of -$4.5bn inOctober (YTD +$41.8bn).
■ 9 new launches: 8 equity and 1 fixed income. Non traditional productlaunches continue in October with dominance of smart beta ETFs.
Investment Themes for the MonthEquities (-$5.9bn outflow):
■ Japan (-$3.6bn) - Nikkei 225, TOPIX and leveraged long ETFs saw sizeableredemptions and inflows into inverse ETFs which added to the bearishsentiment. In other segments, we saw notable outflows from dividendETFs but inflows into REITs.
■ China (-$1.7bn) - Outflows primarily from China A Share indices.Leveraged long and multi-factor strategies also saw materialredemptions. However, a selection of sector ETFs (IT, Consumer Staplesand Financials) had interest.
■ Korea (-$351mn) - A single ETF tracking leveraged long KOSPI 200 hadsignificant outflows which more than offset inflows into other segments.
■ Taiwan (-$312mn) - Although we observed net negative flows, sentimentwas mixed where there were outflows not only from an ETF tracking TSECTaiwan Top 50 but also from an inverse ETF tracking the same index.Further, there were inflows into low vol and dividend ETFs.
■ Hong Kong(-$247mn), Singapore (+$116mn) - Hong Kong outflow wereinto HSI while for Singapore investors were interested in Real Estate.
Fixed Income (+$1.5bn inflow): China money market ETF segment saw inflowsof +$1.4bn.
Commodity (-$68mn outflow): Outflow of -$108mn from crude oil based ETFs.
Ari Rajendra
Strategist
+44-20-754-52282
Deutsche Bank AG/London
Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should beaware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should considerthis report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONSARE LOCATED IN APPENDIX 1.MCI (P) 083/04/2017.
1. Market Overview .......................................................... 3Market review: Strong market rally globally in October ................................. 3
2. Asia-Pac Listed ETF Insights ........................................ 4$5.9bn outflow from equity while $1.5bn inflow into fixed income ................ 4
3. New Product Launches ................................................ 7New launches – 9 new ETFs with smart beta strategy dominance ................ 7
4. Global ETP Overview and Investment Trends ............... 8Global ETP AUM surpassed $4.5tr with over $1tr YTD growth ...................... 8Regional positioning: Inflows all through broad DM, EM and Europe ............ 9Global Investor positioning in Asia: Japan inflows, China outflow ................. 9ETFs vs. Mutual Funds in Asia Pac .............................................................. 11
5. Performance and Growth ........................................... 12Performance and growth for Asia-Pac focused ETFs listed globally ............. 12Top ETPs – Asia-Pac listed ........................................................................... 14Top ETPs – Other regions with Asia-Pac focus ............................................. 17
Appendix B: How we define ETPs ................................. 56
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ETF Monthly Asia
1. Market OverviewMarket review: Strong market rally globally in October
Equity markets rallied across the globe in October and major benchmarks withinAsia-Pac region posted strong monthly gains. Japan posted biggest monthly gainin last two years, followed by India bringing in highest monthly returns this yearafter seeing losses for two consecutive months. Korea, Singapore and Chinamarket performance were notable recording second highest monthly gains in2017. Taiwan and Australia monthly market performance were also strongest thisyear.
Broad Asia-Pac market growth was positive throughout this year and picked up inOctober after slowing down in September. Broad global emerging markets madea strong come back in October after posting first monthly loss in September.Outside Asia-Pac region, US and European markets continued to record positivereturn.
Following is the snapshot of major benchmarks’ recent performance:
Figure 1: Major Benchmark Performance
Japan (Nikkei 225) 8.13% 3.61% 15.16% 26.32%
South Korea (KOSPI2) 5.47% 2.59% 28.29% 30.34%
China (CSI 300) 4.44% 0.38% 21.05% 20.10%
Taiwan (TWSE) 4.49% -2.42% 16.65% 16.19%
Hong Kong (HSI) 2.51% -1.49% 28.39% 23.16%
India (Sensex) 6.17% -1.41% 24.74% 18.91%
Singapore (FSSTI) 4.79% -1.75% 17.12% 19.91%
Australia (S&P/ASX 200) 4.00% -0.58% 4.29% 11.12%
US (S&P 500) 2.22% 1.93% 15.03% 21.12%
Europe (STOXX Europe 600) 1.82% 3.82% 9.35% 16.59%
Asia-Pac (MSCI AC Asia Pacific - MXAP) 4.25% 0.16% 24.42% 20.84%
EM (MSCI Emerging Markets - MXEF) 3.45% -0.55% 29.78% 23.64%
Source: Deutsche Bank, Bloomberg Finance LP Source: Deutsche Bank, Bloomberg Finance LP
Deutsche Bank AG/London Page 3
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ETF Monthly Asia
2. Asia-Pac Listed ETFInsights$5.9bn outflow from equity while $1.5bn inflow into fixedincome
Asia-Pac listed ETPs recorded net outflows of -$4.5bn last month where year-to-date flows have reached +$41.8n. Equity ETFs experienced -$5.9bn worthof redemptions, partially offset by inflow of +$1.5bn into fixed income ETFs.Commodity ETPs flows were slightly negative (-$68mn). For more details pleaserefer to Net Flows section.
Japan and China dominate equity outflows, followed by Korea and TaiwanThe Equity ETF segment saw strong outflows in October totaling -$5.9bn, bringingYTD flows to +$42.1bn.
Figure 4: Equity ETF flow drivers by investment focus -Japan & China - Oct'17
Country Leveraged long Inverse Sector Smart Beta Flows as % of AUM (rhs)
-10%
-5%
0%
5%
10%
15%
20%
25%
(800)
(600)
(400)
(200)
-
200
400
600
Korea Taiwan Hong Kong Singapore
Flo
ws
as
% o
f A
UM
Flo
ws
($m
n)
Country Leveraged long Inverse Sector Smart Beta Flows as % of AUM (rhs)
Source: Deutsche Bank, Bloomberg Finance LP, Reuters Source: Deutsche Bank, Bloomberg Finance LP, Reuters
■ Heavy redemptions from Japan focused ETFs. Each month, Asia-Pacregion's flow activity is heavily tilted towards Japan focused ETFs whichhave been receiving strong inflows this year. However, in October Japanfocused ETF flows went into negative territory recording outflows of -$3.6bn. These were primarily driven by ETFs tracking Topix and Nikkei225 indices (-$3.8bn). We observed similar sentiment amongst leveragedlong (-$741mn) and inverse (+$889mn) categories, mainly with ETFsproviding exposure to Nikkei 225. Smart beta category also experiencedoutflows (-$230mn), primarily from dividend strategy based ETFs (-$163mn). On the contrary, sector focused ETFs received inflows (+$228mn) which were dominated by REITs (+$208mn).
■ Significant outflows from China focused ETFs. October net outflowstotaled -$1.7bn primarily from China A Share indices such as SSE50 (-$566mn), FTSE China A50 (-249mn), CSI 300 (-$115mn). HSCEI(-$346mn) also had notable outflows. Further leveraged long ETFsrecorded monthly outflows of -$357mn (SSE180 and CSI 300). Smartbeta category also saw outflows and multi-factor lost -$178mn (CSI
Page 4 Deutsche Bank AG/London
14 November 2017
ETF Monthly Asia
Shanghai SOE Index). However, China sector (IT, consumer staples andfinancials) attracted +$79mn.
■ Outflows from Korea focused ETFs (-$351mn). A single ETF trackingleveraged long KOSPI 200 (-$741mn) had significant outflows whichmore than offset inflows into other segments. Inflows were observed intoSamsung Group Index (+$150mn) and Korean sector ETFs (+$187mn)where +$136mn was into IT sector.
■ Taiwan focused ETFs recorded net outflows of -$312mn. Although thenet flows were negative for Taiwan, the picture was rather mixed. Weobserved outflows from both ETFs providing long (-$162mn) and inverse(-$240mn) exposures to Taiwan Top50 index. Additionally, there wereinflows into smart beta ETFs (+$103mn), primarily into low vol anddividend strategies.
■ Hong Kong ETFs saw net redemptions of -$247mn over the last monthwhich was almost entirely from ETFs tracking Hang Seng Index (-$238mn) and concentrated into one ETF.
■ Singapore focused ETFs also benefitted in October. These ETFsaccumulated +$116mn inflow driven by one ETF with exposure to highdividend yielding REITs (+$78mn).
Fixed income inflow concentrated into China money market ETFsAsian fixed income ETF market October flows turned positive totaling +$1.5bn.Almost entire inflows were into China money market ETFs collecting +$1.4bn.These ETFs continued to see big swings with over a billion dollars flowing in andout each month this year.
Commodity ETPs experience net outflowsCommodity ETPs outflows totaled -$68mn in October. ETFs tracking crude oilprices saw major outflows totaling -$108mn, from both long only and leveragedlong categories.
Turnover: MoM turnover activity increased by 4.4%Total turnover activity into Asia-Pac ETPs increased by 4.4% where total turnoverobserved ($167.7bn) was compared to the last month's total ($160.6bn). Ona country level, stock exchanges in China topped the turnover ranking withaggregate turnover of $104.9bn, followed by Japan ($30.8bn), Korea ($16bn) andHong Kong ($10.1bn). For more details please refer to Turnover section.
In Asia, Chinese money market ETFs are traded heavily (3.6 time of its totalAUM in Oct'17) and account for over 50% ($87.3bn) of the regions total turnover.Leveraged/inverse equity ETF (primarily Japan and Korea) is also another categorytraded heavily (2.6 time of its total AUM in Oct'17) and account for about over20% ($36.2bn) of the region's total turnover.
Deutsche Bank AG/London Page 5
14 November 2017
ETF Monthly Asia
Figure 6: Turnover activity concentration in Asia
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
China MoneyMarket
Lev/Inv equity Others
Tu
rno
ver/
AU
M
Tu
rno
ver
($m
n)
Oct'17 Turnover/AUM (rhs)
Source: Deutsche Bank, Bloomberg Finance LP, Reuters
AUM: Assets continue to rise beyond $400bnAsia-Pac-listed ETP AUM continued to grow and closed the month at $416.9bnamid bullish equity markets in October. ETP AUM rose by 3.2% or $12.8bn onMoM basis and 32.6% or $102.5bn on a year-to-date basis. Asian ETP assetsare dominated by Japan listed ETFs which constitute over 60% of the Asian ETPmarket and 3/4th of Japanese ETF assets are concentrated among top 6 products.Other major markets are China, Hong Kong and Korea. Japan ETF market haswitnessed robust growth this year (+45%) while China ETF assets haven't grownmuch and have seen negligible addition to assets.
Figure 7: Listing country level AUM growth - MTD Figure 8: Listing country level AUM growth - YTD
-4%
-2%
0%
2%
4%
6%
8%
10%
-
50
100
150
200
250
300
Mo
M G
row
th
AU
M (
$b
n)
Oct-17 Sep-17 MoM change (rhs)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
-
50
100
150
200
250
300
YTD
Gro
wth
AU
M (
$b
n)
Oct-17 Dec-16 YTD Change (rhs)
Source: Deutsche Bank, Bloomberg Finance LP, Reuters Source: Deutsche Bank, Bloomberg Finance LP, Reuters
Page 6 Deutsche Bank AG/London
14 November 2017
ETF Monthly Asia
3. New Product LaunchesNew launches – 9 new ETFs with smart beta strategydominance
Asian ETP market witnessed 9 new launches in October including 8 equity and 1fixed income ETFs. Asian ETP market continues to witness non traditional productlaunches this month which are dominated by smart beta ETFs.
Among 8 equity launches, 6 were based on smart beta strategies. These ETFsare based on high dividend paying Korean stocks, Korean low vol stocks, Chinamulti-factor, high yielding Japanese real estate sector, high yielding Singaporeanreal estate sector and sharia theme.
Remaining 2 equity ETFs track Korean large caps and US IT sector respectively.
One fixed income ETF was launched tracking global broad investment gradebonds.
Figure 9: New Launches in October
ETP Name IssuerAsset Class
& StructureExchange
Asia-Pac
Samsung KODEX High Dividend ETF 279530 KS Samsung Asset Management Equity - ETF Korea - KSE 0.30%
Samsung KODEX Min Vol ETF 279540 KS Samsung Asset Management Equity - ETF Korea - KSE 0.30%
ARIRANG Leading Industry ETF 280920 KS Hanwha Investment Trust Management Equity - ETF Korea - KSE 0.23%
KIM KINDEX US INTERNET ETF - Synth H 280320 KS Korea Investment Trust Mg Equity - ETF Korea - KSE 0.50%
MAXIS High Yield J-REIT ETF 1660 JP Mitsubishi UFJ Asset Mg Equity - ETF Japan - TSE 0.25%
Premia CSI Caixin China New Economy ETF 3173 HK Premia Partners Co Ltd Equity - ETF Hong Kong - HKE 0.50%
Lion-Phillip S-REIT ETF SREITS SP Lion Fund Management Co Ltd Equity - ETF Singapore - SGX 0.50%
Pinnacle Enhanced Sharia ETF XPES IJ Pinnacle Investments Equity - ETF Indonesia - Jakarta na
Vanguard Global Aggregate Bond Index Fund Hedged ETF VBND AU Vanguard Fixed Income - ETF Australia - ASX 0.20%
Source: Deutsche Bank, Bloomberg Finance LP, Reuters
Deutsche Bank AG/London Page 7
14 November 2017
ETF Monthly Asia
4. Global ETP Overviewand Investment TrendsGlobal ETP AUM surpassed $4.5tr with over $1tr YTDgrowth
Global ETP AUM risen significantly this year and closed the month at $4.55 trillion,with a month-on-month increase of 2.8% ($129bn) and YTD increase of 29.5%($1 trillion). Global ETP AUM has received record growth this year driven equallyby market growth and inflows (~15%).
ETPs listed globally (ex-RoW) attracted inflow of +$54.3bn in October (+$47.4bnin Sep'17) taking YTD total to +$514.3bn. This is the first time when globalETPs have accumulated more than $500bn inflow in any year. US ETPs receivedinflow of +$50bn, followed by Europe ETPs collecting +$9bn while Asian ETPslost -$4.5bn in outflows during last month. On asset class level, equity and fixedincome collected inflow of +$41.4bn, and +$13bn respectively while commoditiessaw marginal outflows in October.
Figure 10: Global ETP regional asset growth historically
*As of last month except for RoW which is as of 8 Nov 2017
Source: Deutsche Bank, Bloomberg Finance LP, Reuters
Page 8 Deutsche Bank AG/London
14 November 2017
ETF Monthly Asia
Figure 11: Global flows summary by region Figure 12: Regional flows as a % of AUM
Oct-17 Sep-17YTD (Monthly
Avg)
Asia-Pac (4,500) 3,577 4,175
Europe 8,971 7,946 9,205
US 49,851 35,927 37,977
(10,000)
-
10,000
20,000
30,000
40,000
50,000
60,000
Net
Flo
ws
($m
n)
Oct-17 Sep-17YTD (Monthly
Avg)
Asia-Pac -1.1% 0.9% 1.3%
Europe 1.2% 1.1% 1.6%
US 1.6% 1.2% 1.5%
-1.6%
-1.2%
-0.8%
-0.4%
0.0%
0.4%
0.8%
1.2%
1.6%
2.0%
Net
Flo
ws a
s a
% o
f A
UM
Source: Deutsche Bank, Bloomberg Finance LP, Reuters Source: Deutsche Bank, Bloomberg Finance LP, Reuters
Regional positioning: Inflows all through broad DM, EMand Europe
Among ETFs listed globally with regional focus, all the three major categoriesreceived strong inflow in September. Broad (global) DM attracted +$8.1bn, broad(global) EM +$4.5bn and DM Europe recorded +$1.4bn inflows.
Figure 13: Broad market flows movement – Oct 2017* Figure 14: Broad market flows movement – YTD*
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Cu
mu
lati
ve F
low
s ($
bn
)
DM - Europe DM - Broad DM - Asia PacEM - Asia Pac Broad - Asia Pac EM - BroadEM - EMEA EM - LATAM
(10)
-
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20
30
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60
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Cu
mu
lati
ve F
low
s ($
bn
)
DM - Europe DM - Broad DM - Asia PacEM - Asia Pac Broad - Asia Pac EM - BroadEM - EMEA EM - LATAM
*These figures includes globally listed broad market focused ETFs from all the segments within equityasset class (i.e. country, regional, sector, size, strategy, style and thematic).
Source: Deutsche Bank, Bloomberg Finance LP, Reuters
*These figures includes globally listed broad market focused ETFs from all the segments within equityasset class (i.e. country, regional, sector, size, strategy, style and thematic).
Source: Deutsche Bank, Bloomberg Finance LP, Reuters
Global Investor positioning in Asia: Japan inflows, Chinaoutflows
Total assets of equity ETFs listed globally (offshore only) with investment focusin the Asia-Pacific region rose sharply in October amid equity market rally andclosed the month at $153.3bn with an increase of 6.3% on MoM basis and 30.6%above on YTD basis.
Monthly net flows for these ETFs totaled +$2bn in October (-$164mn in Sep'17).Japan and China focused ETFs were the major flow drivers during last month.Offshore investors allocated heavily into Japan focused ETFs totaling +$2.5bnpartially offset by outflows from China focused ETFs (-$627mn) over the lastmonth. Among Japan focused ETFs, both currency hedged (+$1.3bn) and non
Deutsche Bank AG/London Page 9
14 November 2017
ETF Monthly Asia
hedged (+$1.2bn) ETFs were major beneficiaries amid sharp rise in equity marketsand weakening Yen.
Figure 15: Offshore equity ETFs listed globally with investment focus in Asia*
Investment Focus Oct-17% of
AUMSep-17 Aug-17 YTD
% of
AUMOct-17 Sep-17 Dec-16
Emerging Markets
Bangladesh 0 0.0% 0 0 -4 -16.2% 24 24 25
China -627 -1.9% 157 376 -2,483 -8.7% 34,961 33,735 28,476
India -47 -0.4% -105 -90 710 8.2% 12,310 11,512 8,667
Indonesia -13 -1.6% -10 -12 -17 -2.3% 801 812 739
Malaysia 7 1.4% 2 -2 165 55.4% 511 505 297
Pakistan 8 9.4% 17 5 54 111.7% 84 81 48
Philippines 0 0.0% 11 -18 18 8.8% 252 251 203
South Korea -42 -0.8% -123 -80 135 3.5% 5,475 5,106 3,897
Taiwan 15 0.3% 34 154 481 14.8% 4,660 4,394 3,243
Thailand 12 2.5% 21 -42 -39 -9.1% 478 452 427
Vietnam 5 0.9% -6 -3 -17 -3.2% 613 574 518
EM Asia Broad 90 2.2% 145 105 1,256 57.9% 4,415 4,124 2,170
Total -592 -1.0% 142 394 259 0.5% 64,582 61,570 48,710
Developed Markets
Australia -12 -0.4% 9 -1 -375 -11.1% 3,388 3,353 3,379
Hong Kong 24 0.9% 8 -42 -352 -14.6% 2,644 2,594 2,410
Japan 2,495 4.7% -440 -1,195 2,706 5.8% 57,875 52,851 46,353
Total 2,370 3.2% -235 -1,097 4,205 6.7% 78,698 73,295 62,531
Asia Broad Indices 235 2.5% -71 74 1,611 26.2% 10,038 9,379 6,160
Grand Total 2,012 1.4% -164 -630 6,075 5.2% 153,319 144,244 117,402
Net Flows ($ million) AUM ($ million)
*This figure includes ETFs (offshore only) from all the segments within equity asset class (i.e. country, regional, sector, size, strategy, style andthematic).
Source: Deutsche Bank, Bloomberg Finance LP, Reuters
Figure 16: Flows by DM country – Oct 2017* Figure 17: Flows by DM country – YTD*
-500 0 500 1,000 1,500 2,000 2,500 3,000
Australia
New Zealand
Singapore
Hong Kong
Japan
Monthly Flows ($mn)
-500 0 500 1,000 1,500 2,000 2,500 3,000
Australia
Hong Kong
Singapore
New Zealand
Japan
YTD Flows ($mn)
*This figure includes ETFs (offshore only) from all the segments within equity asset class (i.e. country,regional, sector, size, strategy, style and thematic).
Source: Deutsche Bank, Bloomberg Finance LP, Reuters
*This figure includes ETFs (offshore only) from all the segments within equity asset class (i.e. country,regional, sector, size, strategy, style and thematic).
Source: Deutsche Bank, Bloomberg Finance LP, Reuters
Page 10 Deutsche Bank AG/London
14 November 2017
ETF Monthly Asia
Figure 18: Flows by EM country – Oct 2017* Figure 19: Flows by EM country – YTD
-700 -600 -500 -400 -300 -200 -100 0 100
China
India
South Korea
Indonesia
Philippines
Vietnam
Malaysia
Thailand
Taiwan
Monthly Flows ($mn)
-2,500 -2,000 -1,500 -1,000 -500 0 500 1,000
China
Thailand
Vietnam
Indonesia
Philippines
South Korea
Malaysia
Taiwan
India
YTD Flows ($mn)
*This figure includes ETFs (offshore only) from all the segments within equity asset class (i.e. country,regional, sector, size, strategy, style and thematic).
Source: Deutsche Bank, Bloomberg Finance LP, Reuters
*This figure includes ETFs (offshore only) from all the segments within equity asset class (i.e. country,regional, sector, size, strategy, style and thematic).
Source: Deutsche Bank, Bloomberg Finance LP, Reuters
ETFs vs. Mutual Funds in Asia Pac
Asia-Pac ETPs comprised 7.1% of the continent’s mutual fund industry as ofQ2 2017 according to mutual fund industry data published by the InvestmentCompany Institute (ICI). This has steadily grown from 4.6% at the end of Q1 2014.US ETPs comprised 20.3% while Europe ETPs comprised 4% of the respectiveregion’s mutual fund industry as of Q2 2017. Within Asia-Pac, Taiwan is on topwith ETP assets accounting for 19% of mutual fund assets, followed by JapanETP assets accounting for 16.8% of mutual fund assets.
Source: Source: Deutsche Bank, Bloomberg Finance LP, Reuters, ICI
Deutsche Bank AG/London Page 11
14 November 2017
ETF Monthly Asia
5. Performance andGrowthPerformance and growth for Asia-Pac focused ETFs listedglobally
ETF Performance - Outperformers and underperformersAlongside one ETF based on TOPIX ex-financials index, various Korean equitiesbenchmarked ETFs dominated the top performing ETF list for the month whilecouple of ETFs tracking S&P 500 VIX Short-Term Futures Index saw the mostnegative performance.
Figure 22: Top 10 best performance
ETF Name Bloomberg Underlying Index 31-Oct-17 29-Sep-17 31-Aug-17 YTD
Universe: All Asia-Pac listed ETPs + US & Europe listed ETPs with investment focus in Asia-Pacific, Long only, AUM >$100mn as of previousmonth
Source: Deutsche Bank, Bloomberg Finance LP, Reuters
ETP flow growth - Winners and loserKorean equities benchmarked ETFs led the table as largest fund flow receivers asa percentage of AUM during last month, whereas one China money market ETFsaw the largest outflows as a percentage of AUM over the same period.
Figure 26: Top 10 Inflows as a % of AUM
ETF Name Bloomberg Underlying Index % of AUMCashflows
($mn)
AUM
($mn)
% of
AUM
Cashflows
($mn)
% of
AUM
Cashflow
s ($mn)
% of
AUM
Cashflow
s ($mn)
Mirae Asset MAPS Tiger IT ETF 139260 KS KOSPI 200 IT Sector Index 73.6% 135.6 337.6 -23.2% -51.7 -8.8% -21.0 545.3% 231.7
WisdomTree Japan Hedged SmallCap Equity Fund DXJS US WisdomTree Japan Hedged SmallCap Equity 27.9% 39.1 186.3 -3.0% -4.2 0.0% 0.0 57.1% 58.0
E Fund CSI Overseas China Internet 50 ETF Index Fund 513050 CH CSI Overseas China Internet 50 ETF Index 27.8% 36.4 167.2 3.2% 4.0 23.0% 23.0 0.0% 147.4
Capital SZSE SME Price Index Exchange Traded Fund 00643 TT SZSE SME Price Index 27.3% 36.1 173.7 -9.1% -12.9 -9.5% (14.1) -10.1% -15.7
Oct-17 Sep-17 Aug-17 YTD
Universe: All Asia-Pac listed ETPs + US & Europe listed ETPs with investment focus in Asia-Pacific, AUM >$100mn as of previous month
Source: Deutsche Bank, Bloomberg Finance LP, Reuters
Deutsche Bank AG/London Page 13
14 November 2017
ETF Monthly Asia
Figure 27: Top 10 outflows as a % of AUM
ETF Name Bloomberg Underlying Index % of AUMCashflows
($mn)
AUM
($mn)
% of
AUM
Cashflows
($mn)
% of
AUM
Cashflow
s ($mn)
% of
AUM
Cashflow
s ($mn)
GF Tianli Traded Money Market Fund 511950 CH Other -99.1% (249.6) 2.2 0.0% 0.0 0.0% - -110.2% (15.9)
Hanwha Arirang Short-term Credit Bond Securities 263190 KS KAP Money Market Credit Index -52.6% (59.0) 54.9 -50.8% (119.1) -2.6% (6.3) 0.0% 54.7
The authors of this report wish to acknowledge the contribution made byVibhor Mahalwala and Varun Sachdeva, employees of Evalueserve, a third partyprovider to Deutsche Bank of offshore research support services.
Page 54 Deutsche Bank AG/London
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Appendix A: Glossary
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Appendix B: How wedefine ETPs
Exchange-Traded Products (ETPs)We define an exchange-traded product (ETP) as a secure (funded or collateralized)open-ended delta-one exchange-traded equity or debt instrument with noembedded optionality and market-wide appeal to investors. This includesexchange traded funds, exchange-traded commodities (Europe) and exchange-traded vehicles (US).
The figure below provides a summary of our current coverage universe by regionand structure type as on 30 December 2016.
The vast majority of instruments are ETFs (97.4%, 4,779 products, $3,422bn) withthe remainder being ETCs (0.8%, 474 products, $26.5bn) in Europe and ETVs(1.8%, 64 products, $61.7bn) in the US.
Figure 99: ETP Coverage Universe Summary
Source: Deutsche Bank, Bloomberg Finance LP, Reuters
Exchange-Traded Funds (ETFs, 97.4%)US (70.4%): Fund structures that issue shares that are traded on an exchangemuch the same way as equities. ETFs indexed to equity and fixed incomebenchmarks are registered under the investment company act of 1940. Onlyphysical index replication techniques are permissible by this legislation whilesynthetic replication is not allowed.
Europe (15.5%): Fund structures that issue units or shares that are traded on anexchange much the same way as equities. The vast majorities of European ETFsare UCITS III compliant and are primarily domiciled in Dublin and Luxemburg. TheUndertakings for Collective Investment in Transferable Securities (UCITS) are aset of European Union directives that aim to allow collective investment schemesto operate freely throughout the EU on the basis of a single authorization fromone member state. Both physical and synthetic index replication is permissible byUCITS and funds are allowed to track equity, fixed income as well as diversifiedcommodity indices.
Asia (8.9%): Both European and US ETFs are cross sold into the Asian market.
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Exchange-Traded Collateralized Instruments (2.6%)
Exchange-Traded Commodities (ETCs, 0.8%)In Europe as UCITS III does not permit the creation of funds tracking nondiversified commodity indices (for example wheat or oil), exchange-tradedproducts that track single commodity profiles are issued under the EU ProspectusDirective in two structures that have become widely known as exchange-tradedcommodities (ETCs). ETCs can either be physically backed or they can beissued through a bankruptcy remote special purpose vehicle (SPV). Both formsutilize offshore domiciles, such as Jersey, and are classed as debt instruments.Physically-backed ETCs are fully backed with securities that closely resemble thecomposition of a product’s benchmark index. SPV structures are collateralized byassets which could bear no resemblance to those of their respective benchmarkindex and ensure replication of their index return through a total return swapstructure or by holding other derivative instruments such as futures. In the vastmajority of cases, both types of ETCs are fully collateralized with secure assetssuch as money market instruments, government bonds and gold. For moreinformation, please refer to our research report issued on March 11 2010 titled‘The race for assets in the European Exchange-Traded Products Market”.
Exchange-traded vehicles (ETVs, 1.8%)This terminology typically refers to grantor trusts that exist in the US market.These instruments track primarily commodity benchmarks. They differ fromETFs in that they are registered under the Securities Act of 1933 and not theinvestment Company Act of 1940, hence they are not classed as funds. Vehiclesthat replicate commodity benchmarks, more often known as pools, and fundstargeting alternative index returns are formed under the Commodities ExchangeAct and are listed under the 33 Securities Act, and report under 34 Corporate Act.
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Appendix 1
Important Disclosures
*Other information available upon request
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The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s). In addition,the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendationor view in this report. Ari Rajendra
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Equity Rating Key Equity rating dispersion and banking relationships
Buy: Based on a current 12- month view of total share-holderreturn (TSR = percentage change in share price from currentprice to projected target price plus pro-jected dividend yield ) ,we recommend that investors buy the stock.Sell: Based on a current 12-month view of total share-holderreturn, we recommend that investors sell the stock.Hold: We take a neutral view on the stock 12-months out and,based on this time horizon, do not recommend either a Buyor Sell.
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