Q1 2025 was another month with strong inflows for the ETF industry in the Asia Pacific region.
These inflows occurred in a volatile and negative market environment in which investors witnessed the peak of the U.S. stock markets in mid-February. While economic fears—especially around the possible tariffs in the U.S.—increased, investors around the globe acted nervous over any political and economic news. Investor sentiment was impacted by the growth expectations for future technologies such as artificial intelligence after the launch of DeepSeek in China and obviously by the discussions of the impacts of possible tariffs initiated by the U.S. president and potential tit-for-tat reactions from the markets which are the targets of the new tariffs. That said, the tariffs are seen as a kind of trade war between the U.S. and the rest of the world, especially China, by some market observers.
When it comes to this, investors were concerned about a political shift to the right as a result of the general election in Germany in March. Since these concerns did not materialize, German equities started a relief rally, as a possible great coalition seems to be in the favor of investors.
Meanwhile, central banks around the globe adjusted their policies to the current environment by cutting interest rates. These decisions reflect central banks’ efforts to navigate economic challenges, including trade tensions, inflationary trends, and the high market volatility, to support their local economies. With regard to this, it is remarkable that the U.S. Federal Reserve didn’t take any action, as the Fed did not see any need for lower interest rates since economic indicators and inflation numbers for the U.S. were in line with expectations.
Nevertheless, fears of increasing debt in the U.S. and other major economies—which may lead to increasing interest rates—might be the driver for the relatively weak inflows into bond ETFs, while the still somewhat inverted yield curves might be the drivers for the inflows into money market ETFs.
That said, inverted yield curves and especially long-term inverted yield curves are seen as an early indicator for a possible recession. However, there is only a very limited number of indicators which are sending negative signals for economic growth in the U.S. and other major economies. When it comes to this, it is noteworthy that most of these negative indicators are being offset by positive signals from other indicators. But even as it looks like the yield curves are slowly normalizing, this does not mean that there is no recession possible in the major economies around the globe. This is especially true as some major economies, such as Germany, lack economic growth and may need lower interest rates as stimulus. Despite these headwinds, the positive effects of lower interest rates seem to be more important for investors than the current state of some economies.
Assets Under Management by Asset Type
From an Asia Pacific ETF industry perspective, the performance of the underlying markets led—in combination with the estimated net flows—to slightly creasing assets under management (from $1,690.4 bn as of December 31, 2024, to $1,744.0 bn at the end of Q1). At a closer look, the increase in assets under management of $53.4 bn for Q1 was driven by estimated net inflows (+$46.8 bn), while the performance of the underlying markets, added (+$6.8 bn) to the assets under management.
Graph 1: Assets Under Management in the Asia Pacific ETF Industry, December 31, 2024 – March 31, 2025 (USD billions)
Source: LSEG Lipper
As for the overall structure of the global ETF industry, it was not surprising equity ETFs ($1,433.5 bn) held the majority of assets, followed by bond ETFs ($190.3 bn), money market ETFs ($38.7 bn), commodities ETFs ($30.8 bn), alternatives ETFs ($26.1 bn), “other” ETFs ($19.1 bn), and mixed-assets ETFs ($5.6 bn).
Graph 2: Market Share, Assets Under Management in the Asia Pacific ETF Industry by Asset Type, March 31, 2025
Source: LSEG Lipper
ETF Flows by Asset Type
The Asia Pacific ETF industry enjoyed estimated net inflows (+$46.8 bn) over the course of Q1 despite the headwinds in the equity markets globally.
The inflows in the Asia Pacific ETF industry for Q1 were driven by equity ETFs (+$32.6 bn), followed by bond ETFs (+$9.1 bn), commodities ETFs (+$3.8 bn), alternatives ETFs (+$1.1 bn), mixed-assets ETFs (+$0.9 bn), and money market ETFs (+$0.8 bn), while “other” ETFs (-$1.4 bn) faced outflows.
Graph 3: Estimated Net Sales by Asset Type, Q1 2025 (USD Billions)
Source: LSEG Lipper
Assets Under Management by Lipper Global Classifications
In order to examine the Asia Pacific ETF industry in further detail, a review of the Lipper global classifications will lead to more insights on the structure and concentration of assets within the Asia Pacific ETF industry. At the end of Q1 2025, the Asia Pacific ETF market was split into 151 different peer groups. The highest assets under management at the end of Q1 were held by funds classified as Equity Japan ($527.3 bn), followed by Equity China ($271.5 bn), Equity Sector Information Technology ($105.0 bn), Equity Taiwan ($74.1 bn), and Equity India ($73.3 bn). These five peer groups accounted for 60.27% of the overall assets under management in the global ETF industry, while the 10-top classifications by assets under management accounted for 74.05%.
Overall, 19 of the 151 peer groups each accounted for more than 1% of assets under management. In total, these 19 peer groups accounted for $1,508.9 bn, or 86.52%, of the overall assets under management.
Graph 4: 15 Largest Lipper Global Classifications by Assets Under Management, March 31, 2025 (USD Billions)
Source: LSEG Lipper
The numbers above show that the Asia Pacific ETF region is more concentrated on classification level than the global ETF industry or the other regions. In addition, the numbers above do show that investors in the Asia Pacific region do have a home bias when it comes to ETF investments. This behavior is in line with U.S. investors, but opposite to that of European investors. With regard to this, it was not surprising to see that Equity Global ($46.8 bn) was only the eighth largest Lipper classification in the Asia Pacific region.
The peer groups on the other side of the table showed some funds in the global ETF market are quite low in assets and their constituents may face the risk of being closed in the near future. They are obviously lacking investor interest and might, therefore, not be profitable for their respective fund promoters.
Graph 5: Ten Smallest Lipper Global Classifications by Assets Under Management, March 31, 2025 (USD Billions)
Source: LSEG Lipper
ETF Flows by Lipper Global Classifications
The net inflows of the 10 best-selling Lipper classifications in the Asia Pacific region accounted for $43.8 bn. In line with the overall sales trend for Q1, equity peer groups (+$33.8 bn) gathered the majority of flows by asset type on the table of the 10 best-selling classifications by estimated net inflows for Q1 2025. That said, compared with the concentration of flows for the single regions, the 10 best-selling Lipper classifications are somewhat more diversified in the Asia Pacific region. Given the overall fund flow trend and the investor behavior in the Asia Pacific ETF region, it was not surprising that Equity Taiwan (+$9.9 bn) was the best-selling Lipper global classification for the first quarter of 2025. It was followed by Equity U.S. (+$7.9 bn) and Bond CNY (+$6.1 bn).
Since money market is in general not considered a core asset type within the ETF industry globally, it is not surprising that there were no money market classifications on the table for the best-selling classifications for the Asia Pacific ETF industry.
More generally, these numbers showed the Asia Pacific ETF segment is concentrated when it comes to the estimated net flows by classification. Generally speaking, one would expect the flows into ETFs to be concentrated since investors often use ETFs to implement their market views and short-term asset allocation decisions. These products are made and, therefore, are easy to use for these purposes.
Graph 6: Ten Best- and Worst-Lipper Global Classifications by Estimated Net Sales, Q1 2025 (USD Billions)
Source: LSEG Lipper
On the other side of the table, the 10 peer groups with the highest estimated net outflows for Q1 accounted for $11.7 bn in outflows.
Equity China Small- and Mid-Cap (-$3.3 bn) was the classification with the highest outflows for the quarter. It was bettered by Equity Hong Kong (-$2.0 bn), Unclassified ETFs (-$1.4 bn), Money Market CNY (-$1.3 bn), and Bond USD Government (-$1.2 bn).
Assets Under Management by Promoters
A closer look at assets under management by promoters in the Asia Pacific ETF industry shows a lower concentration of the assets under management than in other regions or for the ETF industry globally. In more detail, 80 of the 252 ETF promoters in the Asia Pacific ETF industry are holding assets at or above $1.0 bn. The largest ETF promoter in the Asia Pacific ETF industry—Nomura Asset Management ($251.9 bn)—accounted for 14.44% of the overall assets under management, ahead of the number-two promoter—Nikko Asset Management ($115.3 bn)—and the number-three promoter—Daiwa Asset Management ($106.7 bn).
From a global ETF industry perspective it is surprising that the two largest ETF promoters in the world do not appear on one of the top spots in the Asia Pacific region, iShares—the world’s largest ETF promoter ($76.0 bn)—is “only” the eighth largest ETF promoter in the Asia Pacific region, while Vanguard ($37.3 bn) is the twelfth largest ETF promoter in the Asia Pacific region.
Graph 7: The 10 Largest ETF Promoters by Assets Under Management, March 31, 2025 (USD Billions)
Source: LSEG Lipper
The 10-top promoters accounted for 54.47% of the overall assets under management in the global ETF industry. This meant, in turn, the other 242 ETF promoters registering at least one ETF for sale in the Asia Pacific region accounted for 45.53% of the overall assets under management. These numbers show that the assets under management at the promoter level in the Asia Pacific ETF industry are far more diversified than in the other regions, or on a global level.
ETF Flows by Promoters
Since the Asia Pacific ETF industry is not as highly concentrated with regard to the assets under management by promoter than in other parts of the world, it was not surprising that only four of the 10 largest ETF promoters by assets under management were among the 10-top selling ETF promoters for Q1 2025. Nomura Asset Management was the best-selling ETF promoter in the Asia Pacific ETF industry for the quarter (+$4.4 bn), ahead of iShares (+$3.9 bn) and Yuanta Funds (+$3.9 bn).
Graph 8: Ten Best-Selling ETF Promoters, Q1 2025 (USD Billions)
Source: LSEG Lipper
The flows of the 10-top promoters accounted for estimated net inflows of $31.8 bn. As for the overall flow trend in Q1 2025, it was clear that some of the 252 promoters (70) faced estimated net outflows (-$16.4 bn in total) over the course of the quarter.
Assets Under Management by Domicile
To investigate the concentration by region further, it makes sense to analyze the assets under management by domicile. As of the end of Q1 2025, Japan ($578.8 bn) was the largest single country ETF domicile of the 15 ETF domiciles covered in this report, followed by China ($519.9 bn), Taiwan ($198.5 bn), Australia ($150.1 bn), and the Republic of Korea ($127.8 bn). These five ETF domiciles account for assets under management of $1,575.1 bn, or 90.31%, of the overall assets under management in the Asia Pacific ETF industry.
Graph 9: Ten Largest ETF Domiciles by Assets Under Management – March 31, 2025 (in bn USD)
Source: LSEG Lipper
These numbers show that the assets under management in the Asia Pacific ETF industry are somewhat dominated by a small number of domiciles. Obviously, this concentration is not as high as for other regions or on a global basis.
Estimated Net Flows by Domicile
In more detail, the Republic of Korea (+$10.2 bn) was the single fund domicile with the highest estimated net inflows for Q1. It was followed by Taiwan (+$9.7 bn), Japan (+$8.9 bn), China (+$8.5 bn), and Australia (+$5.7 bn).
Graph 10: The Ten ETF Domiciles with the Highest Estimated Net Inflows, Q1 2025 (in bn USD)
Source: LSEG Lipper
On the other side of the table, Vietnam (-$0.1 bn) was the only ETF domicile in the Asia Pacific region which faced outflows over the course of Q1 2025.
This article is for information purposes only and does not constitute any investment advice.
The views expressed are the views of the author, not necessarily those of Lipper or LSEG.
