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September 2023
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Taiwan onshore fund assets beat offshore rivals on demand for chip stocks

By Hui Ching-hoo   
July 29, 2022

Taiwan’s onshore fund assets have surpassed offshore rivals, driven by investor demand for funds that tap into the local equity market, marking a striking shift in a mutual fund market where investors used to favour foreign funds, according to Julian Liu, the new head of the local asset management industry group.

Figures from the Securities Investment Trust and Consulting Association (SITCA) show that onshore funds had NT$4.68 trillion (US$156.2 billion) of total assets as of June 2022 versus NT$3.3 trillion for offshore funds.

The market used to be dominated by overseas-domiciled funds that are primarily distributed through master agencies such as third-party fund managers.

The change occurred in 2019, when assets of onshore funds overtook offshore counterparts. Investors have been allocating particularly to onshore equity funds that focus on Taiwan’s vibrant technology sector, Liu, who was elected SITCA chairman on July 1, says in an interview with Asia Asset Management.

The sector’s popularity is primarily due to Taiwan’s robust chip manufacturing industry, which has around two-thirds global market share by revenue.

“Taiwanese equity funds’ assets have also overtaken high-dividend funds, which used to be one of the most popular investment choices years ago,” says Liu, who is also chairman of Yuanta Securities Investment Trust Co, Taiwan’s largest exchange-traded fund manager.

He also notes that greater adoption of technology since Covid-19 has led to a five-fold increase in the number of ETF buyers over the past three years to around five million currently, some 70% of whom have invested in Taiwanese equity ETFs.

According to Liu, his major tasks during his three-year term as SITCA chairman are to promote investor education and strengthen communication with other fund industry associations across the region to facilitate cross-border investment schemes and funds passporting.