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Yuanta SITC makes Taiwan Asia’s ETF market hub

Julian Tsung-Sheng Liu, Yuanta SITC
Julian Tsung-Sheng Liu, chairman (left), accepts Yuanta SITC’s Asia Risk award for ETF provider of the year

Named exchange-traded fund (ETF) provider of the year at the Asia Risk Awards 2019, Yuanta SITC explores its history in the ETF space, including how it has grown ETFs in Taiwan and advised firms in the establishment of their own, and considers how this will impact its future transition from product provider to solution provider

Yuanta Securities Investment Trust Company (SITC) founded its first exchange-traded fund (ETF) in Taiwan in 2003 and has continued to innovate and lead the Taiwan ETF industry for more than 16 years. The company has achieved numerous milestones in the ETF market in recent years by launching its first leveraged and inverse ETFs in 2014, its futures-based commodity ETFs in 2015, and its futures-based commodity leveraged and inverse ETFs in 2016. Trading volume has grown from approximately 1–2% to approximately 8–10%. Since Yuanta SITC launched the first bond ETF, growth in the space has skyrocketed since 2017, and Taiwan is currently the largest bond ETF market with in excess of US$40 billion in assets under management (AUM) in Asia. Yuanta SITC has the largest leveraged and inverse ETFs, with more than $3.5 billion in AUM, and its US Treasury bond ETF with over $1.4 billion become the largest bond ETF in Asia.

Yuanta SITC is a major ETF innovator. Because of its product innovation, the firm has achieved significant growth in the Taiwan ETF market over the past few years. As of October 2019, it managed 48 ETFs with $14 billion in ETF AUM and more than 500,000 beneficiaries, covering 28% and 63% of the market, respectively. This year, it launched the first ETF feeder fund, the Yuanta Taiwan ETF Umbrella Feeder Fund in Taiwan, which will completely change the landscape of wealth management by banks in the future.

Yuanta SITC’s leveraged and inverse ETF handbook
Yuanta SITC’s leveraged and inverse ETF handbook was published in English this year

In overseas market expansion, Yuanta SITC has expanded its sub-advisory arm and duplicated its successful experience into other Asian countries. In 2010, the company was the adviser to Krungthai Asset Management, and helped it launch and list eight ETFs in Thailand. In 2018, Yuanta SITC was invited by Bursa Malaysia and Kenanga Investors Berhad (KIB) to be their adviser in developing innovative ETFs, and KIB will soon launch its first leveraged and inverse ETFs in Malaysia. Yuanta SITC is also the adviser of E Fund in Hong Kong, which launched its leveraged and inverse ETFs, E Fund Yuanta Hang Seng Index Leveraged and Inverse Series, in 2017.

Yuanta SITC and China Resource founded a joint venture company in 2015, CR Yuanta Funds, and launched its first ETF on the Shenzhen Stock Exchange. Yuanta SITC has also partnered with Mirae Asset Global Investment in South Korea to cross-list its ETF in Korea and Taiwan, and with Mitsubishi UFJ Trust and Banking Corporation in Japan to launch smart beta products.

As well as emphasising product innovation, Yuanta SITC is continually putting more effort into investor education and ETF promotion. The firm has published more than 60 books on the subject since 2003, with the first Handbook of innovative ETFs being published in English this year to help Bursa Malaysia and KIB educate investors in how to invest in leveraged and inverse ETFs. Yuanta SITC has received numerous awards in Asia in recognition of its contributions in the ETF market.

In developing the next generation of the ETF market, the company has combined artificial intelligence (AI), machine learning and quantitative modelling with investment, and has already constructed an ETF AI investment platform. This has provided ETF portfolio suggestions for retirement, children’s education funds, and so on, for investors to fulfil their investment needs. Yuanta SITC sees itself transforming from an ETF product provider to an ETF solutions provider in the future to keep up with the needs of investors in Taiwan.

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