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Which ETFs Provide Exposure to Taiwan?

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Taiwan ADRs

If you have Taiwanese equities in your sights, you’re not alone. This electronics manufacturing hub of Asia provides something different than your usual Asian investment. Companies like Taiwan Semiconductor Manufacturing (TSM), Advanced Semiconductor Engineering (ASX), AU Optronics (AUO), Himax Technologies (HIMX), Silicon Motion Technology (SIMO), Siliconware Precision Industries (SPIL), and United Microelectronics Corporation (UMC) are popular Taiwan ADRs (American Depository Receipts) on US exchanges. Plus, these stocks can be found among portfolios of global tech-focused funds as well.

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Taiwan exchange-traded funds

To access Taiwanese equities, you can use ETFs like the SPDR MSCI Taiwan Quality Mix ETF (QTWN) and the iShares MSCI Taiwan ETF (EWT). These two ETFs invest exclusively in Taiwan stocks. Of these, the EWT sees the most volumes. In fact, among all ETFs reviewed in detail in this series, the EWT has the highest average volume.

Other ETFs that have over 25% of their assets invested in Taiwanese equities include the PowerShares S&P Emerging Markets Low Volatility Portfolio (EELV), and the iShares MSCI All Country Asia Information Technology ETF (AAIT).

The iShares MSCI Taiwan ETF

The iShares MSCI Taiwan ETF (EWT) was launched in June 2000 and has over $4.1 billion in assets under management. Its expense ratio of 0.62% is on the higher side compared to its peers.

Expectedly, stocks from the information technology sector form the majority of the ETF’s portfolio. The sector makes up 57.5% of the assets, higher than the 51.8% in 2013. Financials come in at a distant second, making up 18.8% of the assets. Exposure to this sector has risen from 13.8% at the end of 2009. Meanwhile, healthcare companies no longer form part of EWT’s portfolio.

The materials sector has seen its share come down from 14.4% in 2011 to 9.3% now.

Performance

EWT has returned 4.3% year-to-date in 2015. In the past three years, the ETF has returned a strong 42.8%, while in the past five years it has returned 62.8%.

So, if you’re looking for diversification from financial stocks, and are leaning towards technology, Taiwan can make for a good diversifier.

Now let’s move on to the two ASEAN-5 members we’ve considered for review, starting with Malaysia.

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