Taiwan’s active exchange-traded fund market is “punching above its weight” and leading growth in Asia Pacific driven by investor demand for downside protection and active management, according to Frank Koudelka, global ETF product specialist at State Street Corporation.
Taiwan, Hong Kong, and China have been the fastest-growing markets for all ETFs in the region thus far this year.
“Taiwan’s active ETF market is punching above its weight. We’re seeing significant inflows into strategies such as covered-call ETFs,” Koudelka says in an interview with Asia Asset Management.
The first active ETF in Taiwan — the Nomura Taiwan Select — was launched just over a year ago.
The island now has more than 25 active ETFs with a market value exceeding NT$270 billion (US$8.5 billion) and a 37% share of net inflows into all ETFs.
“Retail investors constitute the largest segment of the market. Active management is gaining traction. Investors also show increased interest in covered-call ETFs for downside protection,” Koudelka says.
“Different delivery vehicles”
Active ETFs are not new in Asia Pacific. In Australia for instance, they have been available for more than a decade. On the other hand, regulators in China and India are still deciding whether to approve the funds.
Koudelka explains that some regulators are cautious regarding certain parameters, such as the level of active investing exposure that an active ETF can have while still effectively replicating the performance of its underlying index.
“The markets experiencing the most significant growth are those that have allowed full active management,” he says. “They enable asset managers to decide how they want to invest, whether through a somewhat index-tracking approach or through fully fundamental, bottom-up stock picking.”
Australia is the most innovative active ETF market in the region in many ways, with the adoption of semi-transparent structures and full portfolio disclosure.
Australian-listed ETFs are structured on a dual-access model, allowing investors to trade themon the stock exchange, or directly through the registered unlisted funds of issuers.
Koudelka doesn’t consider active ETFs as “pure competitors” to traditional mutual funds. “I see them as different delivery vehicles. And younger, generally wealthier investors seem to gravitate more toward [active] ETFs.”
Figures from PricewaterhouseCoopers show that globally, active ETF assets grew 9% year-on-year to US$1.7 trillion in 2025.
Boston-based State Street had around $53.8 trillion of assets under custody and/or administration at the end of last year.
