Posted inNewsResearch

Taiwan investors shift to balanced funds

In terms of offshore funds, Taiwan investors trimmed fixed income and moved into balanced and money market funds in the first half, according to data from the Securities Investment Trust and Consulting Association (Sitca).
Stack of seven balanced pebbles in front of view of sea, at sunset.

Offshore fixed income funds continue to dominate the Taiwan market with 48% marketshare, but the asset class as a whole recorded a net outflow of NT$95.26bn ($3.12bn) during the first six months of 2018, according to Sitca data.

High yield bond funds led the outflows, dropping 10.75% to NT$102.14bn from end-2017.

In offshore fixed income, the best performer in the first half was Parvest Bond JPY Fund and the worst performer was Silverdale Bond Fund, according to FE (chart below).


During the first half, investors moved into balanced (mixed asset) funds and money market funds (MMFs). Balanced funds added a total of NT$64.3bn in assets, up 15.3%. MMF assets grew 18.64% to NT$4.9bn.

Taiwan has 17 offshore MMFs for sale to local investors, according to FE.

In terms of geographic allocation, in both equity and fixed income, Taiwan investors continue to prefer funds with exposure to Greater China. Funds across all asset classes investing in China and Hong Kong saw a 10.72% increase in AUM.

Other regional funds had outflows, the strongest from emerging markets and Asia-Pacific (including Japan) products.

FSA reported earlier that some fund managers have recently left the Taiwan market. Earlier this year, Columbia Threadneedle Investments exited, terminating sales of 13 offshore funds. Hong Kong-based Value Partners also left Taiwan after selling its share in an onshore joint venture fund management operation to Aberdeen Standard Investments (ASI) in 2017.

In the first half, overall assets in Taiwan’s offshore funds fell 0.93% to NT$3.46trn.

Fixed income funds remained the most preferred offshore category with NT$1.65trn in assets, followed by NT$1.29trn in actively-managed equity products.


Offshore funds by asset class (in NT$)

December 2017 June 2018 Market share Change
Total equity funds 1.3trn 1.29trn 37% -0.50%
Bond funds 79.3bn 79.7bn 2% 0.58%
High yield bond funds 950.1bn 847.9bn 24% -10.75%
Emerging market bond funds 412.3bn 427.9bn 12% 3.79%
Others 308.1bn 298.9bn 9% -2.98%
Total fixed income funds 1.75trn 1.65trn 48% -5.44%
Balanced funds 421.8bn 486.1 14% 15.25%
Money market funds 26.3bn 31.2bn 1% 18.64%
Fund of funds 0.0bn 0.0bn 0% 0.00%
Exchange traded funds 0.3bn 0.3bn 0% -7.34%
Others 3.7bn 3.5bn 0% -4.75%
Total 3.5trn 3.46trn 100% -0.93%
Source: Sitca


Best and worst performers in 1H

Top and bottom three fixed income funds


Top and bottom three equity funds

Source: FE, in US dollar terms. All funds are offshore-regulated and available for sale in Taiwan.

Part of the Mark Allen Group.