Fubon Asset Management launches new ETF Technology Tracker Fund

The nation's third exchange-traded fund (ETF), Fubon Taiwan Technology Tracker Fund, debuted yesterday to provide an alternative tool with lower risks for investors interested in technology stocks.

The ETF introduced by Fubon Asset Management Co (富邦投信) consists of 49 electronics stocks that are among the top 150 stocks in terms of market capitalization.

The stocks include Taiwan Semiconductor Manufacturing Co (台積電), Delta Electronics Inc (台達電), Hon Hai Precision Industry Co (鴻海精密), Siliconware Precision Industries Co (矽品精密) and Compal Electronics Inc (仁寶電腦).

ETFs track an index, but can be traded like a stock. Each share of the current versions of ETFs tracks a basket of stocks in some index or benchmark, providing investors with a vehicle that closely parallels the performance of these benchmarks while allowing for intra-day trading.

Political turmoil involving an ongoing sit-in protesting against President Chen Shui-bian (陳水扁) probably resulted in Fubon Taiwan Technology declining 1.04 percent from the offering price to close at NT$34.25 (US$1.04) yesterday.

The TAIEX dropped by 1.02 percent, while technology stocks slid by 1.27 percent yesterday.

There were 2.968 million shares traded yesterday.

"Technology stocks are the mainstream in the local bourse that account for 56.5 percent of capitalization and 78.8 percent of transactions," said Yu Ching-teh (游景德), manager of Fubon Taiwan Technology, in a phone interview.

Technology ETFs also constitute 70 percent of foreign investors' top 10 holdings, Yu said. By choosing a basket of stocks, investors can disperse risk from a single pick, he said.

Another benefit of ETFs is the low stock exchange tax, which is 0.1 percent of a transaction, compared with 0.3 percent for common stocks, Yu said.

As the second half of the year is the traditional peak season for electronics and technology companies, Yu said that Fubon Taiwan Technology will perform well.

The nation's first two ETFs are offered by International Securities Investment Trust Co (寶來投信) and include the Polaris Taiwan Top 50 Tracker Fund that tracks the nation's top-50 capitalized stocks and a Polaris Taiwan Mid-Cap 100 Tracker Fund that covers 100 the 51st-biggest by capitalization down to No. 150.