Conventional wisdom has it that this year's big seller will be exchange-traded funds. They are low-cost, efficient windows into a variety of equity markets, as well as useful tools for portfolio management, construction and transition. At a time when asset owners struggle to identify those fund managers with skill, or when investors have no faith in their ability to pick the right stocks, ETFs seem to be an ideal solution.

Moreover, ETF managers report that although their absolute AUM levels have fallen in the past year, these falls have been much smaller than the levels of the indexes tracked by their products. Volumes and customer accounts have risen.

Yet an industry survey conducted by AsianInvestor and Clifford Chance suggests that some of this may be hype, and that ETFs are playing a relatively minor part in how institutional investors allocate assets.

We asked respondents where they expect to see the largest allocation of capital by institutional investors in Asia over the next 12 months. Respondents were asked to rank the top-three most likely destinations.

ETFs came a distant sixth. The two clear winners were debt capital markets and equity capital markets. Distressed/opportunity funds ranked third. Money markets and infrastructure funds are also reckoned to attract more inflows this year than ETFs.

"We would have thought ETFs would have ranked higher, given the current economic climate," says James Walker, funds partner at Clifford Chance in Hong Kong.

In another question, we asked people whether retail investors would prefer absolute-performance products, active funds, passive products, structured products and other types of products. We did not specify ETFs but passive products enjoyed middling support; by far respondents expect retail investors to seek actively managed or absolute-return oriented products.

More specifically we asked what kind of investment strategy will receive the greatest volume of inflows from both retail and institutional investors over the next 12 months, for both equities and fixed income. For both asset classes, about one-third of respondents think active absolute-return products will gather the most assets. For bonds, 40% of respondents think active long-only strategies will garner the most.

ETFs won 21% of the vote for equities, coming in third ahead of passive and private equity; in fixed income, ETFs got 8% of the vote, in fourth place behind passive funds but still ahead of private equity. These are modest expectations for ETFs, which suggest that, although ETF managers can still enjoy growth in Asia, don't expect a flood.

AsianInvestor and Clifford Chance appointed Ipsos to conduct a survey, online and through interviews, with industry professionals around the world. The survey took place during the week of March 9.

We received 214 complete responses, with 39% coming from independent or affiliated asset-management companies, 17% from service providers to the buy-side, 11% from distributors of investment products and 10% from institutional investors. The majority of respondents were based in Hong Kong or Singapore, with a roughly similar distribution from other regional markets.

Of this group, 41% were senior managers or partners, while 27% were in sales/business development and 11% were analysts or portfolio managers.

The full survey results appear in the April edition of AsianInvestor magazine.