Taipei--Exchange traded funds (ETFs) have grown in popularity in Taiwan in the past four years, with turnover rising seven-fold, and the Taiwan Stock Exchange has been busy recently telling overseas investors about the ETF opportunities that now exist.
The TWSE, which operates Taiwan's main stock market, held an investor conference in Hong Kong last week to raise awareness of ETF trading in Taiwan among major players there.
Citing data, the TWSE said ETF trading has grown at a faster pace in Taiwan in recent years than in any other market in Asia, with average daily turnover in ETFs rising to NT$7 billion (US$228 million) in 2016 from NT$1 billion in 2013.
Also, ETFs accounted for about 9 percent of the market's total turnover in 2016, up from 1 percent in 2013, and the number of ETFs listed on the exchange have risen from 36 at the end of 2015 to 62 at the end of December 2016 and 65 as of the end of January, according to TWSE figures.
At the seminar jointly held by the TWSE and Bloomberg, the exchange told Hong Kong investors that Taiwan has a wide range of ETFs that track products not only in the spot market but also in the futures market, and leveraged and inverse ETFs are also available.
ETFs traded in Taiwan have also expanded from funds tracking financial products in Taiwan to those in seven foreign markets: Hong Kong, India, China, Japan, Europe, the United States and South Korea.
These many options help investors drive higher returns in a bullish market or hedge risks in a down market, the TWSE said.
At the end of December, the market added a new type of ETF fund: one that tracks tracking futures market volatility issued by Fubon Asset Management Co. (????).
The firm launched the Fubon S&P 500 VIX Short-Term Futures ETF, which uses the S&P 500 VIX Short-Term Futures Index Excess Return as its underlying index, according to the TWSE.
The VIX index refers to the CBOE Volatility Index, widely considered the best gauge of uncertainty in the market.
Taiwan also added in January three ETFs tracking U.S. treasury bonds -- the Yuanta Daily U.S. Treasury 20+ Year Bond ETF, the Yuanta Daily U.S. Treasury 20+ Year Bond Bull 2X ETF, and the Yuanta Daily U.S. Treasury 20+ Year Bond Bear 1X ETF -- all issued by Yuanta Securities Investment Trust Co. (????).
The TWSE said the Hong Kong investment conference gave foreign institutional investors a better understanding of Taiwan's ETF trading to help them seize investment opportunities here.
The exchange said participants in the seminar included representatives from multinational hedge funds, banks, insurance companies and asset management firms.
Source: Focus Taiwan News Channel