The Yuanta US Treasury 20+ Year Bond ETF was the biggest asset gatherer in the first half of 2017 in Taiwan. Launched in January, it accumulated TWD25bn ($830m), before seeing outflows of TWD213m in July.
Taiwan’s second most successful asset-gathering fund was the Pinebridge Preferred Securities Income Fund, also launched in January 2017, which accumulated TWD19bn in the first half of the year and a further TWD4.4bn in July.
The high inflows place the two funds among the top 20 Taiwan-domiciled funds by AUM at the end of July. Note that 13 of them are money-market funds, and a further three are leveraged or inverse ETFs – products designed for short-term hedgers and speculators.
The Blackrock Global Multi-Factor Fund of ETFs and the Union Global Balanced Fund – mixed-asset products – suffered the biggest net cumulative outflows in the first half of 2017, around TWD3bn each (money market funds and L&I ETFs tend to have high inflows and outflows on a short-term basis and were therefore excluded).
Yuanta and Pinebridge
The success of the US Treasury ETF has propelled Yuanta SITC, the leading ETF provider in Taiwan, to the top spot by net new assets gathered in the first half of 2017, even after taking into account TWD12bn outflows from its money market products.
The firm now manages TWD335bn of AUM, 3.3% more than in July 2016. By comparison, over the same period the total AUM of funds domiciled in Taiwan grew by 0.7%.
Yuanta was followed by Pinebridge, driven by the firm’s aforementioned funds.
Alliance Bernstein third by net new assets, mostly thanks to its Global High Yield Fund and Emerging Asian Income Fund, which attracted TWD11.9bn and TWD3.7bn, respectively.
Fixed income safety
In the first half of 2017, Taiwanese fund providers had the best success selling their fixed income products, with net new inflows of TWD70.6bn. Equity funds fared poorly, with net ouflows of TWD23.8bn. Money market funds saw similar outflows of TWD23.7bn
The pattern is similar to that of funds domiciled in Hong Kong, reflecting investors’ pivot toward safety and income-generating products and away from equity. The popularity of the L&I ETFs plays a counterpoint to this trend as speculators use them to gamble on short-term market moves.
Taiwan’s money market funds constituted 36.6% of the AUM of funds domiciled in Taiwan. Equity funds account for 30.4%, with Yuanta leading the league table. There are some similarities to China’s mutual fund landscape.
Net flows into Taiwan-domiciled mutual funds and ETFs
Data: Morningstar, 31 July 2017, in Taiwanese dollars
