Exchange-traded funds (ETFs) in Taiwan last month reached a new milestone last month as the total assets exceeded NT$4 trillion (US$126.76 billion) and attracted more than 9 million investors, the Securities Investment Trust and Consulting Association (投信投顧公會) said last week.
An ETF, which operates like a mutual fund, typically tracks a particular index, sector, commodity or other assets, with underlying targets including stocks, bonds and futures. However, an ETF can also be bought or sold on a stock exchange as regular stock, the association said.
Total assets of ETFs issued in Taiwan spiked from NT$3.8 trillion late last year to NT$4.04 trillion last month, while the number of beneficiaries grew by 498,100 people, or 5.7 percent, to 9.2 million, meaning that 75 percent of 12 million Taiwanese investors used them as investment tool.
Photo: CNA
The fast-growing popularity of ETFs is enabling the nation’s major fund managers Yuanta Securities Investment Trust Co (元大投信), Cathay Securities Investment Trust Co (國泰投信), Fubon Asset Management Co (富邦投信), Capital Investment Trust Corp (群益投信) and Fuh Hwa Securities Investment Trust Co (復華投信) to benefit from a windfall in sales and clients, the association said.
Yuanta and Capital, the issuers of popular high-dividend funds 00056 and 00713, as well as 00919 and 00937B, gained more than 100,000 clients each last month, it said.
While Cathay’s 00878 ETF drew the largest beneficiaries, its chairman Jeff Chang (張錫) said the boom in ETFs is thanks to their simple design and stable wealth creation effect, which appeal to young and old investors alike.
Passive high-dividend ETF products have highlighted annual dividend yields of at least 5 percent, better than regular incomes generated by time deposits and unit-linked insurance policies.
Further, share prices in several high-dividend ETFs last year soared more than 40 percent, thanks to underlying targets such as Quanta Computer Inc (廣達電腦), Wistron Corp (緯創) and Inventec Corp (英業達), which supply artificial intelligence (AI) servers.
Chang said he is hopeful that the TAIEX could rally another 10 percent this year, as more local firms participate in global AI supply chains and are expected to benefit from a business upturn and fund inflows.
The benchmark index on Friday rose 36.41 points, or 0.19 percent, to close at an all-time high of 18,889.19, with the bulk of the gains coming from Taiwan Semiconductor Manufacturing Co (台積電), a key provider of foundry services for AI-chip designer Nvidia Corp, as well as IC designer MediaTek Inc (聯發科) and several electrical equipment stocks, including Chung-Hsin Electric and Machinery Manufacturing Corp (中興電工) and Fortune Electric Co (華城電機).
The TAIEX has risen 5.34 percent so far this year.
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