Fubon Fund Management has launched two ETFs in Hong Kong providing exposure to Taiwanese stocks.
Fubon Fund Management has listed two Taiwan-focused ETFs in Hong Kong.
The Fubon FTSE Taiwan RIC Capped Index ETF (3021 HK) offers broad market exposure while the Fubon ICE FactSet Taiwan Core Semiconductor Index ETF (3076 HK) targets companies operating in the semiconductor industry.
The funds have been listed on the Stock Exchange of Hong Kong and each comes with a management fee of 0.60% and an estimated expense ratio of 1.60%.
Alan Ng, Managing Director at Fubon Fund Management (Hong Kong), said: “Fubon Fund Management is relatively new to Hong Kong’s ETF market. By leveraging the strong capability and expertise of our parent company, we hope to bring niche products to investors and contribute to the development of Hong Kong’s ETF market.”
Broad market
The Fubon FTSE Taiwan RIC Capped Index ETF is linked to the FTSE Taiwan RIC Capped Index which represents the performance of large and mid-cap stocks listed in Taiwan.
Constituents are weighted by float-adjusted market capitalization subject to a single stock cap of 20% and a cap of 48% on the cumulative weight of all stocks above 4.5%.
As of the end of December, the index contained 108 constituents with over half (57.3%) of its total weight allocated to information technology stocks, while the next largest sectors were financials (18.2%) and industrials (8.2%). Taiwan Semiconductor exhibits the largest influence in the index with a weight of 19.8% followed by MediaTek and Hon Hai Precision Industry with weights of 6.7% and 4.7% respectively.
Last year in July, Fubon rolled out two ETFs in Hong Kong providing inverse (-100%) and twice leveraged (+200%) exposure to the same FTSE Taiwan RIC Capped Index.
Semiconductor
The Fubon ICE FactSet Taiwan Core Semiconductor Index ETF tracks the ICE FactSet Taiwan Core Semiconductor Index.
The index consists of the 30 largest Taiwan-listed companies deriving at least 50% of their revenue from semiconductor-related industries based on the Revere Business Industry Classification System (RBICS).
Eligible firms must also satisfy a minimum ESG score of 40%, as determined by Sustainalytics, as well as have a positive return on invested capital (ROIC) and dividend yield over the past 12 months.
The index is weighted by float-adjusted market capitalization subject to an individual cap of 20% and a cap of 65% on the largest five constituents.
The index’s largest positions currently include Taiwan Semiconductor (22.1%), MediaTek (7.2%), NovaTek Microelectronics (7.1%), RealTek Semiconductor (6.4%), and GlobalWafers (6.0%).
Taiwan is a key region for the global semiconductor industry, accounting for approximately two-thirds (64%) of the global market share amongst semiconductor foundries (companies that manufacture chips for other companies). In addition to foundry, Taiwan also has a leading position in global chip design and the package test sector.
Semiconductors are key strategic assets for the 21st century with demand being spurred by several technological themes including the rise of 5G, artificial intelligence, electric and autonomous vehicles, and the metaverse. According to a report from Deloitte published in October 2021, the global semiconductor market will exceed $1 trillion by 2030, more than doubling 2020 revenues of $440.4 billion.
Ng concluded: “Semiconductors have become a hot investment theme since last year. With the integrated semiconductor supply chain in Taiwan, there are many semiconductor stocks that have large growth potential. Our newly launched ETF enables investors to unlock the growth opportunities in this industry. Today, we proudly present the Fubon ICE FactSet Taiwan Core Semiconductor Index ETF, the very first thematic ETF outside Taiwan to track the performance of Taiwan’s semiconductor industry.”