New initiative in Taiwan stimulates fund mergers

07 October 2013   Category: News, Asia, Taiwan   By Asia Asset Management

A total of 27 small-sized funds in Taiwan have been delisted as a result of mergers to date this year. The trend is expected to gather momentum in anticipation of the launch of the revised ‘Regulation Governing Securities Investment Trust Funds’ from the Financial Supervisory Commission (FSC). 
The 27 delisted funds are managed by leading asset managers, including Yuanta, Prudential, Cathay, JP Morgan, SinoPac, BNP Paribas TCB, ING, and Taishin. 
With the implementation of the new regulation, an increasing number of asset managers will consolidate their domestic equity funds given the similarity of the funds’ underlyings.
Market pundits noted that sub-par performances were not key reasons the asset managers merged the funds. Rather, the managers stand to benefit from consolidation in terms of boosting fund scale and improving cost effectiveness.  
Under the new initiative, mergers between funds with AUMs of less than NT$500 million (US$16.6 million) are exempted from convening beneficiary meetings. Instead, fund managers can directly submit merger applications to the FSC. 
About 166 out of Taiwan’s 627 domestic mutual funds have AUM of less than NT$500 million.