Posted inFund Flows

Allocation products fuelled 2021 Taiwan fund growth

The asset class posted an organic growth rate of 41% for the year.

During the past year, Taiwan domiciled funds posted net inflows of TWD266.9bn ($9.58bn), representing a 6% year-over-year growth, according to Morningstar Direct data. The total net assets reached TWD4.95trn.

Although being the third largest asset class in terms of net assets at the end of the year, allocation funds, which are portfolios with a mix of equities, fixed income and cash, registered a strong growth of net inflows for the year.

They posted a net inflow of TWD117.5bn over last year, with total net assets at TWD420.9bn.

Taiwan dollar-denominated moderate allocation funds gained TWD95.3bn in assets in 2021, making it the category with highest inflows among all allocation categories, and the category with second-most inflows among all asset class.

As of the end of 2021, moderate allocation funds have a fund size of TWD253.1bn.

Equity funds

The net assets of equity funds saw an annual growth of 28%, or TWD278.9bn, to TWD1.49trn at the end of 2021.

The category was boosted by the popularity of Taiwan large-cap equity, and sector equity technology, which saw TWD121.9bn and TWD69.3bn, respectively, in net inflows in the past 12 months.

Funds that invest in tech stocks, in particular, have been attracting new capital for seven quarters in a row, Morningstar noted.

Fixed income funds

Meanwhile, investors have become more selective when investing in the fixed income sector, the largest asset class in Taiwan.

The category reported TWD117.5bn in inflows for the year, or a 3% year-over-year increase, to reach TWD1.97trn in net assets.

US dollar denominated corporate bond, government bonds, and global high yield bonds were the top three fixed income categories in 2021 by fund flow, with TWD46.1bn, TWD33.2bn, and TWD25.4bn respectively.

But in the fourth quarter, global high yield bond funds posted a net outflow of TWD6.1bn.

“In the face of rising inflationary pressure, the US Federal Reserve made more hawkish remarks and hinted at the possibilities of tightening monetary policy in the near term. Investors in Taiwan were exiting their bond-fund positions in global high-yield bonds, global bonds, and fixed-term bonds,” said Morningstar.

Most popular managers

Reversing a disappointing third quarter, TWD780.1bn market leader Yuanta Financial attracted the most net inflows during the quarter with TWD25.7bn, thanks to its equity dividend ETF products.

With AUM of TWD232.2bn, Allianz Global Investors was the only foreign house among the fourth-quarter leaders. The firm collected a total of TWD31.2trn for the year.

Hammered by redemptions from bond funds, Pinebridge recorded the largest outflows among all fund managers in the last three months of 2021.

Meanwhile, flows into sustainable assets totaled TWD48.3bn in 2021 to reach an aggregate of TWD155.3bn.

There were 16 new sustainable funds launched during the year, more than the annual sum of 11 in 2020.

Taiwan Fund Flows Q4 2021

SectorNet assets (TWD bn) Dec 2021Market share % Dec 2021Net flows (TWD bn) Q4Net flows (TWD bn) 2021
Fixed income1965.94043.653.9
All long term4089.783120.3438.1
Money market856.617(69.3)(171.1)

Part of the Mark Allen Group.