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This Year 60% of ETF Purchases Concentrated in 0050 and 0056, Small Investors Sniffing Out Discounted Opportunities!

This Year 60% of ETF Purchases Concentrated in 0050 and 0056, Small Investors Sniffing Out Discounted Opportunities!

According to the latest statistics from the stock exchange, as of April 28, the net subscriptions for 0050 and 0056 have accumulated to NT$234.9 billion this year, accounting for nearly 60% of all Taiwanese stock ETFs.

During this period, the net subscription amount for 0050 is NT$129.9 billion and for 0056 it's NT$105 billion, with the scale of 0056 hitting a record high despite the unfavorable market conditions.

Amid the corrections in the Taiwanese stock market due to tariff issues, investors are seizing long-term investment opportunities and actively increasing their positions in Yuanta Taiwan 50 (0050) and Yuanta High Dividend (0056). Both ETFs have received substantial support from capital, making them the preferred choices for bargain hunting.

0050, as the first market capitalization-weighted ETF in Taiwan, reflects the market capitalization changes of its constituent stocks directly in stock prices, allowing investors to participate efficiently in Taiwan's stock market. The ETF is set to undergo a fee rate optimization and stock split plan, with an expectation to exceed NT$500 billion in scale. The management fee will drop to 0.08% for assets exceeding NT$500 billion up to NT$1 trillion. The execution of the stock split will also significantly lower the entry threshold for new investors.

Meanwhile, 0056 is Taiwan's first high-dividend ETF, which has maintained its record of consecutive dividends for 15 years despite facing multiple adverse events since its establishment in 2007. According to Yuanta Investment Trust, as of April 28, 0056's distributable income includes NT$4.12 from dividend income and NT$3.01 from capital gains, providing a solid basis for future dividend support. As Taiwan enters its dividend distribution season, further endorsements of constituent stocks' dividend income are expected.

Overall, ETFs offer the advantages of risk diversification and periodic adjustments in holdings, leading to a shift in capital from individual stocks to ETFs. According to data from the stock exchange, nine out of the top ten monthly regular investment accounts are Taiwanese stock ETFs, and five of the top ten investor counts for listed companies as of April 25 are also Taiwanese stock ETFs, indicating a sustained trend in investment behavior.

0050 and 0056 are entirely focused on Taiwanese stocks, exposing investors to systemic risks of a single market. Yuanta Investment Trust reminds investors that it is not possible to achieve diversification by increasing the number of constituent stocks; thus, comprehensive cash management planning is crucial before investing to avoid excessive exposure to substantial yearly declines. However, when significant market corrections occur, it also presents a better opportunity to invest in high-quality Taiwanese companies, highlighting their operational resilience and long-term advantage in dividend payouts compared to global markets.

It's essential to note that participating in ETF dividends requires caution, as the dividend yield does not represent the rate of return. The dividends received from companies are accounted for in the daily net asset value and shouldn't be solely based on a single dividend amount to estimate future payouts. Long-term dividend records serve as a better metric for evaluating dividend capacity.