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These include: three South Asian funds (Lyxor ETF MSCI Thailand, Lyxor ETF MSCI Malaysia, Lyxor MSCI India); the Lyxor ETF MSCI Asia APEX 50 (a concentrated tradable version of the more widely followed MSCI AC Asia ex-Japan index); and the Lyxor ETF Commodities CRB Non-Energy (which will provide investors with a portfolio of metals, agricultural and soft commodities, minus the usual exposure to oil).
The introduction of the five new funds will bring LyxorÆs total ETF offering to 13 in Singapore. In Hong Kong, it already has 12 funds in place. The latest listings will make Lyxor the largest ETF provider in Asia by product offering, surpassing other global giants such as Barclays Global Investors and State Street Global Advisors.
Joseph Ho, managing director and head of exchange-traded funds for Asia Pacific at SG, says the current launch will complete LyxorÆs range of Asian market access products in Singapore by adding a South Asian range of funds to its current offering of North Asian products. Also, the addition of the MSCI India MSCI Asia APEX and Commodities CRB Non-Energy product will offer investors varieties in investment strategies from existing offerings.
Previously, Lyxor has listed the following: the Lyxor ETF MSCI Asia Pacific ex-Japan, Lyxor ETF China Enterprise (HSCEI), Lyxor ETF Hong Kong (HIS), Lyxor ETF India (S&P CNX NIFTY), Lyxor ETF Japan (TOPIX), Lyxor ETF MSCI Korea, Lyxor ETF MSCI Taiwan and Lyxor ETF Commodities CRB (Reuters/ Jefferies CRB Index).
The SGX move also signals that stage one of LyxorÆs game plan for Asia is now complete, Ho says. Lyxor now has a full suite of Asian access products for all major Asian markets available in the two leading regional financial hubs û Hong Kong and Singapore.
Next, Ho says, Lyxor will begin rounding out its product range with ETFs linked to more global destinations and differentiate the offering by entering into different market sectors, asset classes, themes or even strategies.
With talks of regulatory cooperation emerging across the region, Lyxor is eyeing the possibility of entering the Taiwan, Thailand and Malaysia markets in the near future, which may help to consolidate LyxorÆs leading presence as an ETF player in Asia. By the end of 2009, Ho hopes to extend the product offerings to include up to 40 destinations worldwide.
Ho notes, however, that unlike Hong Kong or Singapore, technical challenges remain in other markets. These can either manifest as regulatory differences, acceptance of UCITS III standards or settling differences.
In the end, he adds, as an ETF provider, Lyxor does not face the same asset gathering time pressures that traditional mutual fund providers experience. Cross-listing existing funds from LyxorÆs other platforms will add only marginal differences to total expenses and the use of ETFs will help break market cycles as sellers are compelled to jump on the latest existing themes.
Ho believes ETFsÆ defensive nature in the current crisis can be attributed to the higher use by institutional investors, which are moving out of individual stock or sector bets to a wider diversification of markets or geographies.
Furthermore, Ho says more institutional investors are replacing direct allocations to illiquid securities, such as certain fixed-income products, to asset-linked ETFs which offer visibility in market trading and liquidity amidst a heightened sense of risk control.
Singapore recorded the highest turnover for ETF securities in October this year. In the United States, institutional groups are lobbying regulators to recognise ETFs as tier-one equivalents, similar to stocks or treasury products. It is a development more Asian investors are observing with interest.
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