ETF Talk: Taking a Shine to Taiwan

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Taiwan’s population is less than 2% of the People’s Republic of China. But despite the shadow of its huge neighbor, Taiwan is an export-oriented, developed economy with a bright growth outlook. If you are interested in tapping that opportunity, consider buying the iShares MSCI Taiwan (EWT).

This non-diversified fund attempts to correspond to the price and yield performance, before fees and expenses, of an index primarily consisting of stocks traded on the Taiwanese Stock Exchange.

EWT has gained 1.7% so far this year, after rising 15.5% last year. For income-oriented investors, the fund also offers a current yield of 1.99%. There could be many sunny days ahead economically for a country that exports high-end computer chips, liquid-crystal display (LCD) screens and other consumer electronics. Electronics, especially mobile technologies, continue to see growth in both developed and developing countries.

This fund’s assets reflect the export patterns of the Taiwanese economy, including information technology, 52.5%; financial services, 17.7%; and basic materials, 12 %. The fund also invests in telecommunication services, consumer discretionary, industrials, consumer staples, energy and health care. EWT’s top ten individually held companies comprise 47% of its assets. The top five of these are: Taiwan Semiconductor Manufacturing Co. Ltd., 20%; Hon Hai Precision Industry Co. Ltd., 6.6%; MediaTek Inc., 3.6%; Chunghwa Telecom Co. Ltd., 2.8%; and Cathay Financial Holding Co., 2.5%.

EWT-091813

Taiwan’s export-oriented economy means that its fortunes rise and fall with that of the world’s economy. As the economic outlook brightens in Europe, Asia and the United States, Taiwan is poised to prosper. If you are enticed by Taiwan’s growth prospects, you may want to look into the iShares MSCI Taiwan (EWT).

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