Yuanta launches innovative communications ETF in Taiwan

Jul 7th, 2020 | By | Category: Equities

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Taipei-based investment manager Yuanta Securities has launched a new ETF in Taiwan providing access to a globally diversified portfolio of companies that are driving technological advancement in the telecommunications industry.

Yuanta launches innovative communications ETF in Taiwan

The ETF targets companies providing network equipment, infrastructure, and semiconductors required for the rollout of telecommunications services.

The Yuanta Global Nexgen Communication Innovative Technology ETF (00876 TT) has listed on the Taiwan Stock Exchange and comes with an expense ratio of 0.90%.

The fund is linked to the iSTOXX Global NexGen Communication Innovative Technology Index, created by Qontigo’s indexing division Stoxx.

The index selects its constituents from a universe of stocks listed in the US, UK, France, Germany, Netherlands, Japan, Hong Kong, South Korea, and Taiwan.

China A-shares that are participants of the Stock Connect Program as well as Chinese ADRs, P Chips, Red Chips, and H-Shares are also eligible for inclusion.

Only stocks with a minimum market capitalization of $500 million, an average daily trading value above $2m, and positive return on equity (ROE) and earnings per share (EPS) ratios over the past 12 months will be considered for selection.

The methodology focuses on companies providing network equipment, infrastructure, and semiconductors required for the rollout of telecommunications services. The index screens for firms that derive at least 30% of their revenue from 32 sectors associated with the telecommunications innovation based on FactSet’s Revere Business Industry Classification System (RBICS).

To focus on firms that are driving technological development, the selection list is sorted in descending order according to the ratio of a company’s research expenses to sales. Firms ranking in the bottom 20% are removed.

The 100 largest companies are then chosen to form the final index which are weighted by float-adjusted market capitalization subject to a single stock cap of 6% and an aggregate cap of 10% on all China A-share companies.

Julian Liu, Chairman of Yuanta Securities, commented, “We are very delighted to work with Stoxx once again. We have been cooperating with Stoxx since 2017 in researching AI, 5G, Aging, and other themes, an innovative area that we called mega-trend. This is mainstream not only in Taiwan but also in the world. Yuanta has always been the pioneer in providing innovative investment solutions for Taiwan’s investors.”

Rick Chau, Head of Index for the Asia-Pacific Region at Qontigo, added, “We are happy to deepen our relationship with Yuanta Securities while strengthening our commitment to Asia, especially in the thematic space.”

The new fund is similar to the Yuanta Global Future Telecommunications ETF (00861 TT) which debuted in Taiwan in November last year and comes with an expense ratio of 1.13%. This fund is linked to the ICE FactSet Global NextGen Communications Index which targets developed market companies that are involved across the value chain of future communications including providers of wireless communications equipment, manufacturers of smartphones, suppliers of infrastructure such as real estate, and providers of wireless services.

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