October buying momentum grows instead of fading
Although Taiwan equities went through volatility in October, investor buying momentum grew instead of fading, with funds pouring into market-cap ETFs. Among them, 0050 once again saw single-month net subscriptions top 100 billion yuan in October, marking the fourth time this year reaching that milestone, with cumulative full-year subscriptions topping 7,000 billion yuan, firmly holding the ETF market inflow champion title.
Funds concentrate in market-cap duo
Ranking Taiwan equity ETF net subscriptions year-to-date, the top five are led by 0050 and 00631L with 7,005 billion yuan and 1,626 billion yuan taking first and second place, followed by 009816, 00981A and 00406A, with net subscriptions ranging from 1,037 billion to 1,559 billion yuan. Analysts say market-cap ETFs remain favored mainly because 0050 and 00631L carry no human stock-picking error risk, can keep pace with Taiwan industrial growth over time, and do not miss market rallies.
In contrast, facing high-level volatility in Taiwan equities and greater stock-picking difficulty, plus daily holdings disclosure hindering trading, highly overlapping holdings and other factors that could trigger crowding upon a reversal, investors have become more cautious about adding to active ETFs. Taking benchmark active ETF 00981A as an example, it drew only 5.43 billion yuan in net subscriptions since October, a sharp contrast with 0050 drawing over 100 billion yuan in a single month, highlighting investors embracing index funds and abandoning active funds, and driving 00631L assets to 285.6 billion yuan, surpassing 00981A.
Buying at lows delivers strong returns
Judging from performance buying at historical lows, entering the Taiwan 50 Index at different cycle lows has delivered excellent dividend-inclusive returns: entering at the 730 tech-stock correction low delivered a 25.0% dividend-inclusive return, entering at the 331 US-Iran war low delivered 63.3%, and entering at the most panicked moment of Trump tariffs delivered as high as 229.6%. Funds allocated to heavyweight stocks this year via ETFs such as 0050 and 00631L have formed a fourth institutional force supporting Taiwan equities, and with the long-term AI trend continuing, are expected to keep adding momentum and push Taiwan equities to challenge the 50,000-point mark before year-end.