Demand for Hong Kong exchange traded funds (ETFs) is set to increase as United States investors turn away from their home market and diversify into offshore markets, according to local bankers.
Justin Pascoe, director of investments at State Street Global Advisers, said US investors traditionally put their money in stocks or funds based in the US.
However, he said this investment bias had changed since September 11 as US investors have given up the notion that the US was a safe haven and become more aware of the importance of holding a diversified investment portfolio, which included exposure to offshore markets.
'Exchange traded funds allow investors to invest in overseas markets in an easy and convenient way,' Mr Pascoe said.
The funds are a cross between mutual funds and stocks. They can be bought and sold like ordinary listed stocks. Investors can buy and sell them through their brokers during trading hours. They are similar to mutual funds as they track entire indices - or baskets of stocks - and offer risk-diversification benefits.
First launched in the US in 1993, they have become one of the fastest-growing investment products in the world.
