Asia Pacific’s exchange-traded fund market grew significantly in 2024 and is expected to follow up with another strong year in 2025 with China as its new regional leader, according to State Street.
In 2024, Asia Pacific’s exchange-traded fund (ETF) market grew 47 percent to $1.7 trillion in assets, outpacing the global growth rate of 28 percent. This included 45 percent from inflows and just 2 percent from market appreciation with increases recorded across all asset classes and strategies.
And in 2025, the regional ETF market is expected to follow up with growth of another 30 percent, according to a forecast by State Street’s 2025 global ETF outlook titled «Global Expansion Accelerates».
«We expect to see strong inflows to persist with expanding investor interest. We also expect actively managed ETFs to rebound as large, global issuers continue to enter the market and focus more on distribution,» said Frank Koudelka, State Street’s global head of ETF solutions. «Retail investors in the Asia-Pacific region are increasingly turning to ETFs for their flexibility, tax efficiency, and ease of access, and younger investors are leading the charge.»
New Leader in the Region
Within the region, China saw the most significant growth of 75 year-on-year to $506 billion with over 60 percent coming from net inflows. Three major themes included ETF buying from the state government, expansion of the ETF Connect scheme with Saudi Arabia and Singapore as well as fee reduction by some of the largest ETF firms after the local regulator signaled the need for reforms.
State Street predicts that China will become 2025’s largest ETF market in APAC at over $700 billion, surpassing Japan.
«State Street anticipates continued state fund purchases this year, following Chinese authorities’ directives for fund firms to increase local equity holdings by 10 percent over the next three years,» the asset manager added.
