Weather volatile markets through diversification

It has been a tough start to the year for equities around the world, and Asia has not escaped the turmoil. Exchange traded funds are a good way to seek out returns amidst the uncertainties.

Tough start, uncertainties to ensue

It has been a tough start to the year for equities around the world, and Asia has not escaped the turmoil.

From fears of a hard landing in China and Britain’s exit from the EU to plunging oil prices and negative interest rates, markets have been plagued by uncertainty. While the markets have calmed down after the wobbly 2016 start and Asian equities have shown some recovery momentum since March, the question remains whether these gains can be sustained for the rest of the year?

China holds the key to how the rest of the region performs. Despite the potential for a liquidity-driven rebound in the A-share market, sentiment remains fragile because of the delicate macro-economic transition currently underway in China.

India’s economy is unlikely to expand like it used to, as growth momentum is slowing and the recovery hasn’t been broad-based.

The best-performing markets in the March quarter were the emerging Southeast Asian markets of Thailand, Indonesia, and the Philippines. In contrast to Asia’s emerging economies, Singapore, Taiwan, and South Korea have been hit by a flurry of growth downgrades as their exports plunge.

How can you seek out returns amidst the uncertainties?

Exchange-traded funds (ETFs) are a good way to begin participating in the equities markets of Asia, especially when liquidity and access to markets may be challenging at times. ETFs are an effective means of diversification that allow investors to invest in a basket of stocks that typically trade at much higher volumes than individual stocks. High trading volumes mean high liquidity, enabling you to get in and out of investment positions with minimum risk and expenses.

But what should investors like you be looking out for when investing in Asian ETFs?

Visit go.dbs.com/ETF to learn more about the benefits of investing in ETFs.