The Financial Supervisory Commission (FSC) yesterday dismissed rumors that it plans to tighten rules on high-dividend exchange-traded funds (ETFs), adding that its focus is on improving oversight of products that use “income equalization reserves” for dividend payouts.
There are no new restrictions targeting high-dividend ETFs, the FSC said in a statement.
High-dividend ETFs are among the most popular investment products in Taiwan.
Photo: Kelson Wang, Taipei Times
The clarification came after reports sparked concern that the regulator was curbing dividend distributions.
The FSC in November 2023 introduced a directive requiring asset managers to enhance internal controls and prevent the misuse of income equalization reserves to artificially inflate yields.
The reserves, funded by investors’ subscription payments, should be used sparingly to ensure transparency and safeguard investor interests, the regulator said yesterday.
“The requirement is intended to enhance investment safety and accountability, and should not be interpreted as a means to suppress high-dividend ETFs,” it said.
ETFs account for more than 66 percent of Taiwan’s public fund assets, with high-dividend ETFs representing nearly half of the equity ETF market.
The high-dividend products are particularly popular among retirees and income-focused investors, analysts have said.
The FSC said that it has not prohibited distributions from dividends or capital gains, disputing claims by some stock analysts and social media commentators.
The Securities Investment Trust and Consulting Association (投信投顧公會) last month issued guidelines to help fund managers comply with the 2023 directive after identifying inconsistencies in industry practice.
Yesterday, the regulator said that the association’s guidelines do not restrict dividend or capital gains payouts, and are not intended to suppress high-dividend ETFs.
Some high-dividend ETFs have recently experienced fund outflows, which analysts attributed to market speculation about stricter payout rules.
Leading fund houses — including Yuanta Securities Investment Trust Co (元大投信), Cathay Securities Investment Trust Co (國泰投信) and Capital Investment Trust Corp (群益投信) — issued separate statements emphasizing that their high-dividend ETFs continue to deliver stable yields and long-term total returns, maintaining appeal for income-focused investors.
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