Total assets managed by the nation's 33 fund companies topped NT$1 trillion for the first time at the end of last month, reaching NT$1.047 trillion, according to the Association of Securities Investment Trust and Advisory (投信投顧?蔆|).
The milestone was reached with an increase of NT$82.43 billion in assets over September, a jump of 8.55 percent.
Taiwan's mutual fund market grew at an incredible pace during the 1990s. At the end of 1992, there were just four fund companies with assets of NT$73.6 billion. Seven years later, the number had reached 33 with total assets of more than NT$1 trillion -- more than 13 times the size in 1992.
At the forefront of the indus-try, according to the association's figures, is China SITC (??華投信), with NT$99.52 billion in assets as of last month for a 9.5 percent slice of the pie.
Yuanta (??j) and National (建弘) held second and third place, with NT$83.79 and 73.56 billion in assets, respectively.
Analysts said the competition in the mutual fund market has been stiff, especially with an ever increasing number of players joining the fray in recent years.
In 1997, there were just 21 fund companies; analysts believe the number could reach 50 by the end of next year, up from 33 now.
And the competition could get tougher if Taiwan joins the WTO early next year. Taiwan's membership card will be accompanied by an increased number of foreign asset management groups in the local market.
"Many small fund companies will be forced to drop out from the market, and some larger ones will be taken over by others," said Henry Cheng (鄭|吜?, managing director of Manulife Funds Direct. "More than a dozen foreign fund companies have aimed at the Taiwan market in recent years. They are waiting for deregulation, which is required by the WTO."
Cheng said that after deregulation, not even the largest of fund firms will be safe.
"These foreign fund companies have a more sophisticated know-how and huge resources to market their products," Cheng said. "After these groups take over many small fund companies, they could even threaten the survival of many large fund companies presently in the market."
Meanwhile, there have been reports recently that a major shareholder of Kwan Hua SITC (光華投信) was trying to sell its controlling stake. But sources said the NT$70 per share offering price was too high and some potential buyers would only buy at NT$35 per share.
The matter is still under negotiation. Sources said several other mergers could emerge in the near future.
According to the association, two more funds, the Jardine Fleming Value Growth Fund (怡富價-?赤灠簹? and the Taiwan International Technology & Financial Fund (金1帕鴔
Most stock funds performed better than the market's index last month, an association executive said, and that has lured capital from retail investors.
The total asset size of open-ended stock funds increased NT$9.74 billion last month, or 5.0 percent, while funds closed to new investors dropped NT$0.15 billion to NT$32.87 billion.
Funds that invest capital in the local market for overseas investors saw their assets increase NT$2.09 billion, or 5.49 percent, to NT$40.24 billion. For international stock funds, the increase was NT$3.31 billion, or 6.58 percent, to NT$53.77 billion.
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