Mutual funds rose 10.93 percent to a nine-year high of NT$2.57 trillion (US$83.3 billion) last year as exchange-traded funds gained popularity, although market volatility rendered most investments unprofitable, state-run First Securities Investment Trust Co (FSITC, 第一金投信) said on Wednesday.
The mutual fund balance represented an increase of NT$253.4 billion from a year earlier, with cross-border exchange-traded funds growing by NT$391.16 billion, followed by foreign bond funds and domestic exchange-traded funds, it said.
Their strong showings more than offset downward position adjustments in currency and high-yield bond funds, FSITC said.
Last year saw the New Taiwan dollar weaken 2.97 percent, while the TAIEX dropped 8.6 percent, central bank and Taiwan Stock Exchange data showed.
The fund house attributed the corrections to capital flight from emerging to advanced markets following interest rate hikes by the US Federal Reserve and the ongoing trade dispute between the US and China.
The two factors would continue to weigh on global markets and slow the global economy, FSITC said.
“Pessimistic sentiment will inevitably gain the upper hand this year,” FSITC said.
Schroder Investment Management Taiwan (施羅德證券投資) voiced similar observations, saying it could take a while for the TAIEX to recover.
Correction cycles usually last 10 to 14 months and the local bourse only fell from its peak in the fall of last year, Schroder chief investment officer Jordan Chen (陳朝燈) said.
Listed firms in Taiwan posted an 8.2 percent gain in revenue last year, but are likely to have difficulty holding steady this year when the global economic slowdown dampens demand for technology products, Chen said, adding that the Fed could also raise interest rates.
Against this backdrop, Schroder no longer favors smartphones, but prefers old-economy plays in the real-estate, automation and e-bike sectors, as they are usually less volatile.
FSITC said it backed companies involved in artificial intelligence development.
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