ETFs to gain from fee transparency moves

ETFsExchange-traded funds (ETFs) are likely to be promoted as part of a move toward greater fee transparency in Asia. The prediction from consultancy Cerulli Associates comes as regulators in Hong Kong, Korea, India and Singapore consider whether to enforce more disclosure of the costs borne by mutual fund investors. “As the initiatives are aimed at reducing costs for end-investors, there could be further efforts by regulators to promote exchange-traded funds as a low-cost solution to investors, and online platforms, along with robo-advisory channels,” said the consultancy. Fee transparency has become a hot topic in developed markets such as the UK, which in 2013 implemented the retail distribution review (RDR), a set of rules aimed at revealing the true cost to retail investors of financial advice. Cerulli reports that some international asset managers welcome greater transparency in markets such as Hong Kong, which they see as lagging behind developed-market standards. However, some Asia-based managers are opposed to this kind of regulation, believing it is not needed or is inappropriate. These critics, “believe that Asian markets and investors' behavioural traits are different from those of international markets”, said Cerulli. ©2017 funds global asia

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