Cathay launches Taiwan 5G thematic ETF

Dec 22nd, 2020 | By | Category: Equities

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Cathay Securities has launched a new ETF in Taiwan providing exposure to local companies aligned with the theme of 5G technology.

Cathay launches Taiwan 5G thematic ETF

Cathay Securities has launched a new ETF in Taiwan targeting the 5G investment theme.

The Cathay Taiwan 5G Plus Communications ETF (00881 TT) has listed on Taiwan Stock Exchange (TWSE) and comes with an expense ratio of 0.45%.

5G (from “5th Generation”) refers to the latest generation of cellular mobile communications and the innovation and infrastructure that supports the technology.

Its adoption should provide faster speeds, more functionality, and lower latency.

Proponents of the technology say that widespread connectivity has the potential to make information universally accessible, foster a digitalized sharing economy, transform diverse industries, and enhance people’s quality of life.

Its impact is expected to be felt across many spheres such as smart cars, VR/AR functions, manufacturing, healthcare, and the internet of things.

Index methodology

The fund gains its exposure to the 5G theme by tracking the TIP FactSet Taiwan 5G Plus Communications Index which was unveiled earlier this year and is the first index to be created through a partnership between TWSE’s indexing division Taiwan Index Plus and global financial information provider FactSet.

The index screens the universe of common stocks listed on TWSE and Taipei Exchange for companies that derive at least 50% of their revenue from select industries, according to FactSet’s Revere Business Industry Classification System (RBICS), that are representative of the 5G theme.

The methodology targets securities that are ‘Enablers’, companies laying the necessary groundwork in building the 5G network, as well as ‘Beneficiaries’, companies that will ultimately pass on the benefits of the 5G network to consumers.

The process captures a diverse range of firms including those involved in Telecom Services, Wireless Services, Network Security, Control Systems, Infrastructure Services, Smart Phones, Virtual Reality, Wearable Technology, Asset Tracking Equipment, and Autonomous Vehicles, among others.

The 30 largest eligible companies are selected and weighted by float-adjusted market capitalization. The index is reconstituted and rebalanced on a semi-annual basis.

Jeremy Zhou, Head of Indexing at FactSet, said, “5G technologies are moving economies faster toward full digitalization and connectivity, and Taiwan is a significant contributor to this increasingly global value chain. Our work with Taiwan Index Plus provides a precise and efficient tool for investors, helping them identify and seize on the growing opportunity in this space.”

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