The extreme market volatility caused by the coronavirus pandemic has made it difficult for fund managers operating in Taiwan to attract assets.
Out of the 19 foreign players that manage Taiwan-domiciled funds (onshore market), only four firms had net inflows during the first quarter, according to data from Morningstar Direct.
In total, only 13 out of 39 firms, including foreign and domestic players, had net inflows during the period, the data shows.
Foreign firms with net inflows during Q1 2020
| Firm |
Q1 inflows NT$ bn |
AUM NT$bn |
AUM rank (overall)* |
||
|
March 2020 |
March 2019 |
Rank March 2020 |
Rank March 2019 |
||
| Pinebridge Investments Mgmt |
15.98 |
121 | 96 | 8 |
8 |
| Neuberger Berman |
9.44 |
15 | 4 | 30 |
37 |
| Invesco |
6.64 |
88 | 62 | 11 |
19 |
| UBS Securities Invmt Advisory |
3.94 |
7 | 4 | 35 |
33 |
Source: Morningstar Direct. Ranking includes AUM of products managed by foreign and domestic firms, including money market funds and ETFs. Note: data only includes Taiwan-domiciled funds.
Among the foreign players, Pinebridge Investments has become the clear leader with nearly NT$16bn ($530m) of net inflows during the period. The firm’s inflows were led by its Global ESG Quant Bond Fund, which attracted NT$12.98bn from investors.
The fund is new as it was just launched on 30 January, according to the firm’s website. As of this month, its AUM sits at NT$13.11bn, with the majority of assets in investment grade bonds (72.06%) and a smaller allocation to high yield bonds (12.14%). In terms of geographical allocation, the US has the highest exposure (42.42%).
Similarly, fixed income funds were the drivers for inflows at Neuberger Berman, Invesco and UBS AM, Morningstar data shows.
Funds with highest net inflows in Q1 for NB, Invesco and UBS AM
| Name |
Q1 2020 inflows NT$bn |
| Neuberger Berman Hi Qual Corp Bd |
5.75 |
| Invesco Fixed Mat Global EM Bd |
5.86 |
| UBS (TW) Bd – EM Bd 2023-2025 |
4.41 |
Source: Morningstar Direct.
Fixed income avoided
However, not all bond funds were popular among investors in Taiwan. In fact, fixed income products in Taiwan’s overall onshore market had net outflows of NT$68.5bn during the first quarter, according to Morningstar data. This compares with the net inflows of NT$75.6bn in equity products.
Driving the net outflows from fixed income are US dollar government bond funds, which was also the category that had the highest net outflows among all Taiwan-domiciled funds. This is followed by onshore RMB and Asia high yield bond funds, according to the data.
On the flipside, there is a clear preference for US dollar corporate, fixed term and global emerging market bond funds.
|
Top five fixed income categories with largest net inflows |
Bottom five fixed income categories with largest net outflows |
||
| Category |
Q1 2020 net inflows NT$bn |
Category |
Q1 2020 net outflows NT$bn |
| USD Corporate Bond |
30.80 |
USD Government Bond |
(121.43) |
| Fixed Term Bond |
27.10 |
RMB Bond – Onshore |
(17.61) |
| Global Emerging Markets Bond |
26.20 |
Asia High Yield Bond |
(7.35) |
| Global Bond |
12.30 |
USD Diversified Bond |
(3.58) |
| Global Corporate Bond |
5.75 |
Global Flexible Bond |
(3.25) |
Source: Morningstar Direct. Data only includes Taiwan-domiciled funds.
Wing Chan, Morningstar’s Hong Kong-based director of manager research in Asia, noted that the bulk of the outflow from US dollar government bond funds happened last month.
“There is a likelihood that investors took profit after the Federal Reserve’s emergency rate cut led to a surge in US government bond prices,” he said.
In total, Taiwan’s onshore market had net redemptions of NT$6.86n. Besides fixed income, money market funds also had sizable outflows of NT$24bn.
Struggling firms
Of the 15 foreign players that had net outflows in Taiwan’s onshore market, nine of them had redemptions of at least NT$1bn during the quarter, Morningstar data shows.
Foreign firms with net outflows of at least NT$ 1bn
| Firm |
Q1 capital flows |
AUM |
AUM rank (overall)* |
||
|
March 2020 |
March 2019 |
Rank March 2020 |
Rank March 2019 |
||
| JP Morgan Asset Management |
(15,378) |
75 |
109 |
17 |
6 |
| Nomura Asset Management |
(9,172) |
75 |
90 |
16 |
10 |
| Franklin Templeton Sinoam Sec Inv Mgmt |
(6,601) |
73 |
70 |
18 |
14 |
|
Eastspring Securities Invst Tr |
(3,668) |
81 |
89 |
14 | 11 |
| Aberdeen Standard Investments |
(3,538) |
6 |
3 |
37 |
38 |
| FIL Securities Invmt Trust |
(3,032) |
7 |
13 |
36 |
30 |
|
Amundi Asset Management |
(1,926) |
10 |
1 |
32 |
39 |
| AllianceBernstein Investments |
(1,641) |
55 |
63 |
22 |
18 |
| Allianz Global Investors |
(1,499) |
98 |
94 |
9 |
9 |
Source: Morningstar Direct. Ranking includes AUM of products managed by foreign and domestic firms, including money market funds and ETFs. Note: data only includes Taiwan-domiciled funds.
JP Morgan Asset Management had the highest outflows, mainly driven by its China-focused equity strategies – a category that Taiwan investors have avoided since last year.
During the first quarter, five of its China equity products collectively had net redemptions of NT$9bn, with the China A Share Fund having the largest outflows of NT$5bn, Morningstar data shows. The same products already had huge redemptions for the full year 2019, bringing down the firm’s AUM ranking to 17th from sixth in March last year.
The case is similar for Franklin Templeton Investments, with its SinoAM China A Share Equity Fund alone having net outflows of NT$2.37bn.
Overall, the China A-shares, China and Greater China categories continue to have the largest net outflows among all equity funds during the first quarter.
|
Top five equity categories with net inflows |
Bottom equity categories with largest net outflows |
||
| Category |
Q1 2020 net inflows NT$ |
Category |
Q1 2020 net outflows NT$ |
| Taiwan Large-Cap Equity |
112.57 |
China Equity – A Shares |
(26.51) |
| US Large-Cap Blend Equity |
23.104 |
China Equity |
(15.63) |
| US Large-Cap Growth Equity |
1.668 |
Greater China Equity |
(4.67) |
| Global Large-Cap Blend Equity |
1.40 |
Taiwan Small/Mid-Cap Equity |
(1.51) |
| Sector Equity Technology |
0.405 |
Global Emerging Markets Equity |
(1.29) |
Source: Morningstar Direct. Data only includes Taiwan-domiciled funds.
On the flipside, there is a strong preference for domestic-focused large cap funds, which was also the category that had the highest net inflows among all products sold in Taiwan’s onshore market.
Key figures
Net flows by broad asset class
|
Q1 net flows NT$bn |
AUM NT$bn March 2020 |
|
| Allocation (mixed-asset) |
(7.65) |
201 |
| Alternative |
2.54 |
157 |
| Commodities |
10.88 |
11 |
| Equity |
75.64 |
708 |
| Fixed income |
(68.50) |
1,881 |
| Miscellaneous |
4.92 |
49 |
| Money market |
(24.70) |
778 |
| Total |
(6.87) |
3,785 |
Source: Morningstar Direct. Data only includes Taiwan-domiciled funds.
Top 10 fund categories by net inflows
| Name |
Q1 2020 net inflows NT$bn |
| Taiwan large-cap equity |
112.75 |
| USD corporate bond |
30.81 |
| Fixed term bond |
27.10 |
| Global emerging markets bond |
26.21 |
| US large-cap blend equity |
23.10 |
| Trading – leveraged/inverse commodities |
21.4 |
| Global bond |
12.30 |
| Commodities – energy |
10.4 |
| Global corporate bond |
5.75 |
| USD high yield bond |
3.18 |
Source: Morningstar Direct. Data only includes Taiwan-domiciled funds.
Bottom 10 fund categories by net outflows
| Name |
Q1 2020 net outflows NT$ bn |
| USD government bond |
(121.43) |
| China equity – A shares |
(26.51) |
| TWD money market |
(25.21) |
| Other bond |
(18.97) |
| RMB bond – onshore |
(17.61) |
| Alt – volatility |
(16.47) |
| China equity |
(15.64) |
| Asia high yield bond |
(7.35) |
| Greater china equity |
(4.67) |
| Greater China allocation |
(4.00) |
Source: Morningstar Direct. Data only includes Taiwan-domiciled funds.
