Active ETFs complement Taiwan’s plan to be a wealth hub, bourse official says

Taiwan’s move to greenlight exchange-traded funds and multi-asset ETFs complement plans to develop the island as a regional wealth management hub, according to a senior executive at the local bourse.

Speaking at a recent investment forum organised by Asia Asset Management, Chien-Hung Chen, vice president of the corporate planning and strategy department of the Taiwan Stock Exchange (TWSE), said active and multi-asset ETFs will make the ETF ecosystem more complete.

The Financial Supervisory Commission (FSC) gave the go-ahead for the ETFs in August. The first batch of funds is expected to be launched in early 2025.

Chen said active ETFs will support the financial regulator’s masterplan to loosen investment regulations and promote Taiwan as a wealth management centre in Asia by capitalising on the island’s strong economic growth.

The masterplan, which the FSC outlined earlier this year, comprises measures to broaden client base, diversify product scope, attract new capital, and increase institutional investor participation.

“Introducing active and multi-asset ETFs is important to help enhance product diversity,” Chen said at the forum held in Taipei on October 22.

He said the TWSE is working with the FSC on rules for these ETFs. The proposed rules include allowing the funds to only track equity and bond assets in the initial stage, and for multi-asset ETF managers to make public the share of stocks and bonds in the underlying indices of their funds. Consultations are currently ongoing with industry players on the proposals.

Meanwhile, Chen gave an overview of Taiwan’s ETF market. He said ETF assets grew 28-fold over the last ten years, and that Taiwan is now the third largest ETF market in the Asia Pacific region after Japan and China.

“The growth was driven by growing demand for passive investing. Some 87% of Taiwanese institutional investors are expressing interest to raise ETF allocation,” he said.