From 5 high-yield ETFs in Taiwan, we learn how much Taiwanese investors like high-yield ETF.
Taiwanese investors’ ETF investment habits
Inexplicable craze for high-yield ETFs
As I emphasized in the article “For Taiwanese stock investors investing in US stocks“: Taiwanese investors have an inexplicable enthusiasm for high-yiled ETFs──This fully shows that Taiwanese stock investors prefer dividends and are greedy for cash in front of them dividend.
Forget that capital gains (the price difference of rising stock prices) are the source of substantial profits in stock market investment, or more precisely, you are unwilling to invest in long-term investments to grow with the company and reap huge and staggering long-term gains of dozens or hundreds of times.
Swing trade, chasing highs and killing lows
And unwilling to accept the fact that wild swings in the stock market are a necessary stress. Obviously, what I buy is a stock fund or ETF, but I still chase the highs and kill the lows, and swing trading. Most Taiwanese stock investors rarely hold shares for more than half a year, and many people even calculate the holding period in days. The result is that whenever there is a turmoil in the stock market, or a slight correction, they will rush out of their holdings like sheep, and gloat that they are smart and glad that they have at least made a small profit.
These Taiwan stock investment retail investors, famous investment teachers, and even Taiwan stock investment books, as well as many print and electronic media regard the band operation method as the standard, basic principles, and ultimate guidance of Taiwan stock investment. In the long run, it will definitely make investors People miss the stock market rebound and the long-term growth capital gains of excellent companies; unless this wrong investment behavior is completely corrected, it is impossible to accumulate satisfactory returns.
Annual dividends will be eliminated
Not fair to Taiwanese investors
Compared with U.S. stocks, Taiwan stocks have long been unfair to investors, and almost all cash dividends are paid out annually. It should be noted that most of the investors who take dividends into investment considerations are conservative investors, institutional investors, retirees, or non-profit organizations; and these investors often have a need for a fixed cash flow. If the annual dividend distribution is adopted, it will cause difficulties for investors to allocate funds.
For details on the dividend distribution of US stocks, please refer to my first two books:
Taiwan is out of touch with the world
However, Taiwanese investors have a narrow vision and always feel good about themselves (see my previous post “For Taiwanese stock investors investing in US stocks” for details), and will not question the outdated nature of Taiwan’s capital market and the serious disconnection with the world.
It is often not known that the annual dividend distribution is outdated, unreasonable, unfair to investors, and a practice of listed companies for profit; most investors in Taiwan stocks will silently accept it, because there is no comparison, especially five years ago, almost all listed companies in Taiwan stocks Dividends are paid out annually. However, it is the mainstream for US-listed companies to adopt quarterly dividend distributions. Only a few companies adopt semi-annual dividend distributions, and even many US-listed companies adopt monthly dividend distributions.
Taiwan Stock ETF
Total fund size
According to statistics from the SITCA, as of the first half of 2023:
- The fund size of all stock ETF is as high as NT$3 trillion.
- The fund size of Taiwan stock ETF reached NT$1.095 trillion.
Individual Taiwan Stock ETFs
Among them, the more famous, top-ranked, or worth mentioning are the following ETFs:
- Yuanta Taiwan 50 (Taiex code: 0050) and Yuanta Taiwan High Dividend (Taiex code: 0056) under Yuanta Investment Trust account for half of the total Taiwan stock ETF fund size!
- Cathay Pacific Perpetual High Dividend ETF (Taiex code: 00878) maintains its second largest ranking due to its high popularity
- Fuhua Taiwan Technology Co., Ltd. (Taiex codee: 00929) was listed on June 9, 2023. As of July 28, it took only 35 trading days to break through the 20 billion yuan mark in one fell swoop. Straight into the fifth place among all high dividend ETFs in Taiwan stocks!
Top 5 high-yield ETF
The table below is a comparison of the data of the five major high-dividend Taiwan stock ETFs, the Taiwan Weighted Index, and TSMC (ticker: TSM, Taiex code: 2330) as of the first half of 2023 according to the statistics of the SITCA:
| Name of High-yield ETF | Dividend pay frequency | YTD | Yiled rate | Fund size (in 100 million of NTD) | Number of beneficiaries | Listed day |
| 0056 | Annually->Quarterly | 36.33% | 3.01% | 2,346.10 | 904,964 | 2007/12/26 |
| 00878 | Quarterly | 31.03% | 6.4% | 2,260.80 | 1,021,628 | 2020/07/10 |
| 00713 | Quarterly | 25.55% | 5.19% | 365 | 166,735 | 2017/09/27 |
| 00900 | Quarterly | 26.86% | 5.56% | 315.7 | 203,800 | 2021/12/22 |
| 00929 | Monthly | 6.43% | 8% | 201.7 | 115,091 | 2023/06/9 |
| Taiex | Annually | 19.36% | 3.66% | 543,174 | 12,337,000 | 1962/02/09 |
| TSMC | Quarterly | 22.52% | 2.03% | 143,900 | 1,500,000 | 1994/09/05 |
From the table above, there are a few points I would like to point out:
- Except for 0050, almost all of them were listed within the last five years, and 00929 was even established for less than 3 months.
- 00878 has only been listed for three years, and its scale is comparable to that of 0056, which has been listed for 16 years; even the number of beneficiaries far exceeds 0056, which is a rare achievement. Why?
- It only took 35 trading days after 00929 was listed, and its scale exceeded 20 billion yuan in one fell swoop, ranking fifth among all high-yield ETFs in Taiwan stocks. The reason is simple, because it is the first high-yield platform with monthly dividends Stock ETFs!
- 0056’s dividend distribution frequency has always been annual dividend distribution. Seeing that more and more customers of 0056 have switched to buying up-and-coming stars with quarterly dividend distribution, 0056 has also started to change to quarterly dividend distribution in the second half of this year!
- The yield of 0056 is only 3.01%, which is less than half of its competitors, but it is still lower than the average yield of listed companies in Taiwan. It is really ironic for a Taiwan stock ETF that advertises high dividends. In the long run, it’s not good for 0056. Because among the high-dividend Taiwan stock ETFs that advertise high dividends, they simply cannot attract investors. No wonder it has not been favored by new high-dividend Taiwan stock ETF investors in recent years.
How much do Taiwanese like high-yield ETF?
From the following data, it can be proved how much Taiwanese people like to invest in Taiwan stock ETFs with high yield rate:
- 00878 has 1,021,600 shareholders and 0056 has 904,000 shareholders, both of which rank among the top five Taiwanese stocks, and the number of shareholders exceeds Hon Hai (aka Foxconn, ticker: HNHPF, Taiex code: 2317). It can be seen how much Taiwanese investors like to invest in Taiwan stock ETFs with high dividends!
- The increase from the beginning of 2023 to August 4th, excluding 00929, which has been listed for less than a year, the share price increase of the four high-dividend Taiwan stock ETFs in the above table has exceeded TSMC, and they have also greatly exceeded the Taiwan stock market. The stock price performance of Taiwan Weighted Index! This is simply a miracle in the world, because the constituent stocks of ETF are usually large-cap stocks, and the stock price volatility will be very low. So why is Taiwan like this? The reason is simple, because retail investors in Taiwan stocks bought heavily, which of course greatly pushed up the stock price.
- At present, there are 52 Taiwan stock ETFs in Taiwan with a scale of more than one trillion yuan, and more than half of them are high dividend ETFs.
- The total number of beneficiaries who invested in Taiwan stock ETFs reached 4,697,609, accounting for nearly 40% (38%) of the number of Taiwan stock account holders, an astonishingly high proportion.
What’s the situation with U.S. stock high-dividend ETFs?
U.S. stock investors spent more than $60 billion at the beginning of 2023, buying dividend ETFs, thinking they could find a safe haven in the storm. Unexpectedly, the returns of large dividend ETFs this year were far worse than those of technology stock ETFs, and they suffered billions of dollars in losses. This caused a sudden shift in capital flows. As of the end of November 2023, the amount of high-dividend ETF inflows was the lowest in 2006.
This fully proved what I said in my previous post “For Taiwanese stock investors investing in US stocks” that Taiwanese investors are extremely short-sighted and only focus on small profits such as dividends, forgetting the biggest profit from investing in the stock market. The source is capital gains, not dividends.
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