The assets of the Cathay Smart ETF Growth, Conservative and Moderate funds constituted 43% of the total NT$14.6bn of assets in the nine funds of ETFs on Taiwan’s market at the end of March.
“[Thanks to their] cost efficiency, accessibility and transparency, ETFs are quite suited to serve as building blocks of our global multi-asset [portfolios],” Henry Chang, head of quantitative & investment link product division at Cathay SIT, told FSA.
The new assets gathered by the three funds in March earned Cathay SIT the third rank among providers of allocation (multi-asset) funds by monthly inflows. Allocation funds were in demand among Taiwanese investors in the first quarter of 2017, while equity funds suffered significant outflows.
Allianz Income and Growth Fund gathered most new assets, NT$26.3bn, followed by Eurizon Azioni Strategia Flessibile (NT$ 9.6bn) and JPMorgan Global Income Fund (NT$7.1bn).
Top 10 allocation (multi-asset) funds available for sale in Taiwan, by monthly inflows in March 2017.
| Fund | Net Assets (bn NT$) |
Net Monthly Inflow (bn NT$) |
| Allianz Income and Growth | 420.10 | 26.18 |
| Eurizon Azioni Strategia Flessibile | 150.23 | 9.58 |
| JPM Global Income Fund | 300.36 | 7.09 |
| FSITC Global Quattro Focus Inc ** | 3.63 | 3.63 |
| Cathay Smart ETF Growth * | 2.40 | 2.40 |
| Cathay Smart ETF Conservative * | 1.96 | 1.96 |
| Cathay Smart ETF Moderate * | 1.92 | 1.92 |
| AB SICAV I Emerging Mkts Mlt-Asst Port | 11.54 | 1.76 |
| First Eagle Amundi International Fund | 47.69 | 1.16 |
| BlackRock Glbl Multi-Factor Fd of ETFs * | 4.86 | 0.83 |
* Fund of ETFs, domiciled in Taiwan; ** Fund of funds, domiciled in Taiwan
Data: Morningstar, Global AUM as of 31 March 2017
Cathay Smart ETF funds of ETFs aim to deliver long-term capital appreciation by investing no less than 60% of their AUM in ETFs. “Each fund is designed for different risk/reward appetite with different equity/fixed income exposure limit,” said Chang.
The funds invest in a broad range of ETFs, in Taiwan and in other markets. “Equity, fixed income, commodity, REIT, TIPS [US Treasury inflation-protected securities] are typial underlyings we invest in,” said Chang. Leveraged and inverse ETFs can be used for short-term hedging purpose, he added. Some assets can be also invested in other mutual funds, onshore or offshore, registered by the Taiwanese regulator.
The three funds are actively managed, with a two-layer decision-making process, asset allocation and product selection, he said. An asset allocation committee provides monthly guidance, which is monitored by fund managers on a weekly basis.
The Cathay Smart ETF Conservative fund of ETFs carries the annual management fee of 0.50%, the Moderate fund − 0.80%, and the Growth fund − 1.20%, according to Morningstar.
Cathay Smart ETF funds are part of the firm’s broader strategy to build a range of retirement-related products, said Chang, while meeting the demand of Taiwanese investors for low-maintenance, all-in-one multi-asset investment vehicles that free investors from the bulk of decision making.
