After an explosion of about 40 new funds in the market this year, Taiwanese investors' appetite for mutual fund investments is showing signs of decrease. Two of the three new funds launched this month have received a dismal response. It seems unlikely that the 13 funds that are set to join the market in the next two months will fare well given the volatility in the local market and the consequent lack of demand for new funds.
Yuanta Securities Investment Trust (Yuanta SIT) - the sixth largest manager by assets under management as of May 2000 - launched a new fund last week hoping to raise NT$5 billion ($161 million). The manager has attracted about NT$400 million so far. According to local reports, Taiwan SIT has also received poor response to a new fund it is launching. The foreign fund managers are faring no better. ABN Amro has so far raised NT$1 billion for its new fund - much less than the NT$3 billion to NT$5 billion that is the usual target amount.
The SITs to launch their funds in the next two weeks include Fubon, Grand Cathay, Ta Chong, Masterlink, Core Pacific, Polaris, Fuh Hwa, Grand Pacific, Jardine Fleming and Sheng Hwa.
In the past four months, the Taiwan stock market has fallen from a high of more than 10,000 points in April to this week's level of around 7,700, largely led by selling of tech stocks by institutional investors. A new law passed by the government today allowing companies to buy back their own shares has helped technology and financial stocks rebound, with the overall stock market closing at 7916 points today.
According to the Securities Investment Trust Consultants Association in Taiwan, equity funds managed by the top 16 managers have lost around NT$12.9 billion in the past month. The association says the manager so far are not facing large amount of redemption requests from investors.
According to an analyst with Yuanta SIT, the 39 funds already launched have raised more than NT$100 billion in the seven months to July this year. She believes domestic tech stocks may have reached their upper limits in terms of stock value, but she says the tech industry itself still has room to grow. She predicts tech stocks will at least climb back to their previous highs.