Morningstar ETF Intelligence 2011 Taiwan was held on 15 September 2011. We welcomed Chi Schive, Chairman of Taiwan Stock Exchange, to give us an overview of the development of Index investments in Taiwan, and John Gabriel, Morningstar’s ETF Strategist, was also on hand to share his insights on how to choose amongst various ETF available to investors. To wrap up the event, the two speakers also participated on a panel where they discussed indexing trends and various ETF investment strategies.
Schive believes that the ETF Market in Taiwan will experience tremendous growth, fueled by the country’s robust economic growth and improving competitiveness. He went on to stress that the Taiwanese equity market has proved itself to be a market which adheres to fundamentals and offers significant liquidity; a combination which bodes well for the development of a robust ETF market. The ETF market in Taiwan has already established itself as a very active one in terms of turnover. Since 2004, the total turnover of ETFs in Taiwan has exceeded that of Taiwanese equities. Schive believes the launch of more new ETFs, such as thematic ETFs and those mimicking foreign indices, will provide investors with increased ways to diversify their portfolio.
Indeed, the Taiwan ETF market remains green, which is all the more reason that investors should learn how to choose a suitable ETF. After sharing his tips for ETF selection with Hong Kong investors, John Gabriel re-iterated the six key elements which he believes leads to success in ETF investing. These include: 1) understanding the investment thesis; 2) assessing the suitability and risk; 3) evaluating the various alternatives available; 4) understanding the underlying fundamentals; 5) judging the role in the portfolio; and 6) reviewing other structural and operational considerations, such as liquidity, taxation and tracking error etc. Investors should be diligent when studying the structure of ETFs be cognizant of the inherent risks, such as counterparty risk.
The panel discussion began with a discussion about current investment opportunities, and how they can be harnessed through ETFs. Gold and agricultural ETFs were the highlighted as well as a discussion on the leveraged ETFs.
As a follow up to these ETF events we are conducting a series of interviews with our various guest speakers. Please stay tuned to our ETF center on Morningstar websites for these and more upcoming articles!
For presentation slides, please click here (Chinese version only for Schive’s presentation).