Posted inFund Flows

Taiwan fund inflows see worst quarterly slump in five years

The net withdrawal of TWD52.2bn ($1.88bn) was mainly fuelled by money market and fixed income funds, according to Morningstar Direct data.

Excluding money market funds, the Taiwanese market saw a redemption of TWD14.4bn($517m) in the third quarter of 2021, reversing the TWD209.4bn inflow in the second quarter, according to Morningstar Direct data.

Taiwanese’ favourite, fixed-income funds, saw net outflows of TWD45.5bn, but remained the largest asset class in the market with TWD1.9trn under management.

“The dividend pay-out and a relatively conservative investment style of some fixed-income funds are among the reasons that make it a favourite vehicle among Taiwan investors,” said Morningstar.

Despite USD corporate bond and global high-yield bond taking in TWD10.8bn and TWD6.4bn respectively, global emerging markets bonds posted outflows of TWD35.6bn. Other laggards include USD government bonds, fixed term bonds, and Asia high yield bonds.

Money market products, which are usually used for short-term cash management, downsized by TWD37.83bn over the last quarter.

Allocation funds, which are portfolios with a mix of equities, fixed income, and cash, remained the powerhouse for the inflow of the quarter.

They posted a net inflow of TWD31.1bn over the last quarter and saw a growth of 37.2% in assets over the past 12 months.

Among all allocation categories, TWD moderate allocation gained the most assets in the past quarter with TWD19.61bn. The category has an average return of 16.3% year to date, and TWD218.8bn of AUM by the end of September.

Equity funds absorbed TWD19.1bn in the third quarter, which is far less than the TWD121.3bn inflow recorded in the second quarter.

Although inflows slowed drastically, Taiwan investors continued to eye the home market for their equity allocations, Morningstar found. Taiwan large-cap equity and Taiwan small/mid-cap equity reported TWD5.77bn and TWD5.47bn net inflow respectively.

Chinatrust was the asset manager with most net inflow during the quarter of TWD22.4bn, owing to its senior bond, China equity, and Vietnam equity ETF products.

Fidelity, which launched two new funds in the quarter, sat at fifth with TWD2.8bn net inflows.

The market leader of TWD725.4bn AUM, Yuanta Financial was the biggest loser during the quarter with TWD21.3bn net outflow, mainly because the largest fund in Taiwan, the Yuanta/P-shares Taiwan Top 50 ETF, suffered a TWD18.9bn outflow from July to September.

Flows into sustainable funds significantly slowed in the third quarter to TWD5.3bn from TWD13.9bn the previous quarter.

Since the beginning of the year, Taiwan saw 13 new sustainable funds, more than the annual sum of 11 in 2020.

Taiwan Fund Flows Q3 2021

SectorNet assets (TWD bn) Sep 2021Market share % Sep 2021Net flows (TWD bn) Year to dateNet flows (TWD bn)1 year
Fixed income1929.0413.7(52.6)
All long term3820.381287.5202.5
Money market925.119(101.9)(47.7)
Source: Morningstar Direct. Data as of Sept. 30, 2021.

Part of the Mark Allen Group.