Taiwan fund industry grows 9% to $177 billion in 2021: Morningstar
The Taiwanese fund industry recorded 9% growth in 2021, after a fourth quarter of net inflows reversed the net outflow of the previous quarter. Allocation funds led the inflows, with Taiwanese tech funds in particular leading flows into equity funds.
Funds domiciled in Taiwan received NT$290.1 billion ($10.4 billion) in 2021, bringing total net assets to NT$4.9 trillion ($177 billion).
Taiwan-domiciled sector equity technology funds have been attracting new capital for seven quarters in a row through December 2021, a Morningstar spokesperson told AsianInvestor, while providing that “Morningstar categories do not carve out single-country sector tech equity funds”.
Net inflows for the tech category were NT$69.3 billion, with Allianz Global Investors Taiwan Tech being the category’s largest fund flow beneficiary in the fourth quarter. The fund garnered NT$3.9 billion in new assets.
Among fixed income funds, “investors turned selective” the spokesperson said.
Only five of 23 categories in fixed income recorded net inflows, compared with nearly half of equity categories that posted a net inflow.
“Investors in Taiwan were exiting their bond-fund positions in global high-yield bonds, global bonds, and fixed-term bonds. At the same time, though, US dollar-denominated government and corporate bond funds took three places in the five most popular categories during the fourth quarter. Other bond-fund groups that attracted a net inflow were other bond and global emerging-markets bonds,” the spokesperson said.
This preference is likely a response to the US Federal Reserve’s hawkish turn, as investors are now expecting up to seven rate hikes this year.
“Also, multiple bond categories ended 2021 with less assets than the previous year-end, including Morningstar categories fixed-term bond, Asia high-yield bond, global emerging-markets bond, Asia bond, RMB bond--onshore and global flexible bond.”
Generally, allocation strategies drew an additional NT$117.5 billion in assets, leading all broad categories at a growth rate of 41%.
Flows into sustainable assets flowed however to NT$7.2 billion in the quarter, from about NT$15 billion in the third quarter.
Still, the Morningstar representative cast an optimistic light on sustainable assets, saying that “Taiwan investors have sent net inflows into sustainable strategies 10 quarters in a row, which indicates consistent and robust interests in sustainable funds from investors in Taiwan, despite fluctuations in quarterly flows, which can be affected by fund launches and market performance of the time.”
“Taiwan also showed impressive growth of sustainable assets in the past few years which outpaced other markets in the regions such as South Korea. In 2021, the locally domiciled sustainable funds in Taiwan recorded an organic growth rate of 56%, versus Taiwan’s overall fund market of 6%,” the spokesperson said.