Singapore – Singapore's UOB Asset Management (UOBAM) has announced its intention to enter Taiwan's burgeoning active exchange-traded fund (ETF) market. This move comes after Taiwan's regulatory authorities signaled earlier this year that they would begin accepting applications for active ETFs, aiming to diversify the island's rapidly expanding ETF sector, which is currently dominated by passive bond products.
Thio Boon Kiat, the group chief executive of UOBAM, confirmed to Ignites Asia that the firm is actively preparing to launch an active ETF in the Taiwanese market within the current year.
Taiwan's decision to open its doors to active ETF applications in January marks a significant shift in its ETF landscape. This initiative is part of a broader strategy to inject more dynamism into the market, which has seen substantial growth driven primarily by passive bond offerings.
The prospect of entering this new segment has attracted considerable interest from both domestic and international asset managers. At least 18 firms are reportedly gearing up to launch active ETF products. Among the early movers is Japanese fund management giant Nomura Asset Management, which is on track to launch the market's first active ETF in May.
U.S.-based asset manager AllianceBernstein and Taiwanese fund house KGI Securities Investment Trust have also formally filed applications to introduce their active ETF offerings. Meanwhile, local players like Fubon Asset Management and Cathay Securities Investment Trust have ambitious plans, with each aiming to launch at least four such funds in 2025.
Foreign asset managers eyeing the Taiwanese active ETF market may seek to leverage their global investment strategies, offering Taiwanese investors access to a broader range of opportunities within an ETF wrapper. This could potentially provide them with a competitive edge over domestic rivals primarily focused on local markets.
However, UOBAM's Thio struck a cautious note regarding a significant shift in Taiwanese investor appetite towards global assets. While acknowledging the expertise of global managers, he emphasized the primacy of investor needs. He pointed out that the strong performance of Taiwan's domestic markets in the past year had reduced the perceived need for local investors to seek opportunities abroad, fostering continued confidence in their home market.
The robust growth of Taiwan's locally listed ETF market underscores this point. Last year, assets under management in these ETFs surged by an impressive 55 percent, reaching $195.99 billion and representing 66.1 percent of all onshore public fund assets. Recent reports indicate that the total assets in Taiwan's ETF market reached a record NT$14 trillion (approximately US$426.5 billion) in 2024.
Notably, UOBAM is already one of only three offshore fund houses with locally listed ETFs in Taiwan, the others being Nomura Asset Management and Franklin Templeton through its local joint venture. This existing presence could provide UOBAM with a valuable head start in the active ETF space.
In a related development, shifting investor sentiment concerning China and ongoing uncertainty in U.S. markets are reportedly revitalizing interest in the somewhat stagnant Singapore-China ETF cross-listing scheme. UOBAM is actively engaged in discussions with its Chinese joint venture partner, Ping An Fund Management, to cross-list a China-focused ETF on the Singapore exchange this year. This initiative follows the launch of their first such fund under the scheme in November 2022.
Despite initial enthusiasm, the master-feeder scheme linking Singapore and Chinese exchanges, which commenced at the end of 2021, has seen a relatively slow uptake, with only eight ETFs launched to date. The most recent launch occurred in December last year, a collaboration between China Merchants Fund Management and Lion Global Investors. The renewed interest suggests a potential resurgence for this cross-border ETF initiative.
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