The first multi-asset exchange-traded fund (ETF) was listed on the Taiwan Stock Exchange (TWSE) yesterday, following the approval of such funds at the end of last year.
The exchange described the listing as a way to help investors build diversified portfolios.
Speaking at the listing ceremony, TWSE chairman Sherman Lin (林修銘) said multi-asset ETFs would allow investors to build balanced asset allocations, avoid risk concentration, and are expected to lead Taiwan’s capital market to a new milestone.
Photo courtesy of KGI Securities Investment Trust Co
Most ETFs traded in Taiwan are passive ETFs — investment funds that trade like shares and can track anything from a single stock to a broad market index. A multi-asset ETF, or balanced ETF, is a type of passive ETF that invests in a diversified mix of assets, typically including stocks and bonds.
The first multi-asset ETF in Taiwan — the KGI Dual-Core Income Balanced ETF — was issued by KGI Securities Investment Trust Co (凱基投信).
Its underlying index is the ICE TIP Dual-Core Balanced Multi-Asset Index, compiled by Taiwan Index Plus (TIP) and ICE Data Indices. The index is constructed from a combination of the TIP Customized Taiwan Large-Cap Representatives 25 Index and the ICE 10+ Year BBB US Corporate Yield-Weighted Constrained Index.
Bonds account for 70 percent of the balanced ETF’s investments, with stocks making up the remaining 30 percent, the exchange said.
The TWSE said the listing represents an international cooperation model, with TIP and ICE Data Indices complementing each other in financial product development.
Since Taiwan listed its first ETF — the Yuanta/P-shares Taiwan Top 50 ETF — in 2003, the local ETF market has boomed, boosting total asset value to more than NT$6.5 trillion (US$214.4 billion) and making the country the third-largest ETF market in the Asia-Pacific region, Lin said.
In addition to lifting restrictions on balanced ETFs, Taiwan also ended a ban at the end of last year on trading active ETFs, which are managed portfolios designed to outperform a benchmark rather than track an index or single stock.
So far, seven active ETFs have been listed on the local market, Lin said.
Along with the first multi-asset ETF, the new products are expected to add momentum to the ETF market, further boost total assets, and strengthen market resilience as Taiwan works to transform itself into a regional asset management hub, he added.
As of the end of last month, 294 ETFs were listed on Taiwan’s main board and over-the-counter market.
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