Taiwan's 00981A ETF Surges Past 65 Million Shares, Sparks Overheating Warnings

Key facts

• 00981A's shares surged to a record high of NT$25.98 on September 20, up 3.51%.
• Daily trading volume exceeded 65 million shares, the highest since listing.
• The ETF attracted NT$16.8 billion in net inflows on September 20.
• As of late September, 00981A's asset size reached NT$19.955 billion, nearing NT$20 billion.
• The fund has gained over 80% in the past six months.
• Beneficiary count rose to 497,535, up from 11,178 a year ago.
• Premium over net asset value widened to 0.6% on September 19, double the monthly average.
• Top holdings include TSMC, Taiyo Yuden, Delta Electronics, Sunon Wealth, and Accton Technology.

Record-Breaking Rally Triggers Caution

The actively managed ETF 00981A, issued by Uni-President Asset Management, has become a market sensation, with its share price hitting an all-time high of NT$25.98 on September 20, up 3.51% for the day. The fund's daily trading volume soared to over 65 million shares, the highest since its listing, making it the most actively traded security on the Taiwan Stock Exchange. Analysts, however, are sounding alarm bells. The ETF's price has surged more than 80% over the past six months, and its premium over net asset value (NAV) has widened sharply—reaching 0.6% on September 19, double the average of 0.3% over the previous month. This indicates that investors are paying far more than the fund's actual underlying value, a classic sign of overheating.

Investor Frenzy Drives Unprecedented Volumes

The ETF's popularity has been fueled by strong performance since its inception in late May. Over three months, the fund delivered a cumulative return exceeding 30%, attracting bargain hunters during pullbacks. On September 20, the fund's net inflows reached NT$16.8 billion, pushing its total assets to NT$19.955 billion, just shy of the NT$20 billion mark. Trading volumes have been staggering. The fund's daily volume on September 20 surpassed 65 million shares, eclipsing even major stocks like United Microelectronics Corporation. Social media platforms buzzed with excitement, with users celebrating the rally and questioning whether the fund would face trading curbs due to its rapid ascent.

Overheating Signals and Premium Risks

Veteran analyst Tsai Ming-han warned that the ETF has entered an overheated zone. He noted that the premium on September 19 was already elevated, and given the divergence between the fund's top holdings and its price action, the premium likely widened further on September 20. The top five holdings—TSMC, Taiyo Yuden, Delta Electronics, Sunon Wealth, and Accton Technology—showed mixed performance, with Delta rising over 4% but TSMC and Taiyo Yuden lagging, and Accton even falling. Tsai cautioned that the actual NAV growth on September 20 would likely be less than 4%, meaning the premium could be even larger than the previous day. "Investors should avoid blindly chasing prices when the premium is too high," he said, urging them to wait for the official NAV release in the afternoon.

Expert Advice: Avoid Chasing, Wait for Pullbacks

Wei Ming-yu, an analyst at Ruiyuan Investment Consulting, echoed the caution. He noted that the ETF's extreme volume—over 50 million shares on previous days and continuing to climb—signals strong momentum but also the risk of a short squeeze. For those who bought at the initial offering price of NT$10, there is no sell signal yet, and they should hold. But for new investors, he advised against chasing at current levels. Wei recommended watching for signs of distribution, such as a high-volume day with a price decline or a failure to close higher despite heavy volume. If such patterns emerge, he suggested taking profits and waiting for a pullback to support levels before re-entering.

Background: The Rise of Active ETFs in Taiwan

00981A is an actively managed ETF that employs a strategy of investing 60% in large-cap 'white horse' stocks with stable earnings and 40% in smaller 'black horse' stocks with high growth potential. It was launched in May at an issue price of NT$10 per share, with a minimum investment of NT$10,000 per board lot. The fund distributes dividends annually. The ETF's rapid growth reflects a broader trend in Taiwan's market, where active ETFs have gained popularity for their ability to adjust holdings dynamically. The fund's assets have swelled to nearly NT$20 billion, making it the largest active ETF by market value. Its beneficiary count has surged from 11,178 a year ago to nearly 500,000.

Market Context and Long-Term Outlook

The ETF's rally comes amid a broader market correction, with the Taiwan Weighted Index falling 161.37 points to 24,071.73 on September 1, as US tech stocks slumped. Despite short-term volatility, analysts remain bullish on Taiwan's fundamentals, citing the long-term growth of AI and semiconductor industries. The index's forward P/E ratio stood at 14.97 times as of early May, below the five-year average, suggesting attractive valuations. Uni-President Asset Management highlighted Taiwan's economic transformation over the past 50 years—from traditional manufacturing to electronics, semiconductor foundry, and now AI—as a driver of long-term growth. The firm believes that the current pullback offers a buying opportunity for investors with a medium- to long-term horizon.

What Comes Next: Navigating the Hype

The key question for investors is whether the ETF's price can sustain its rapid ascent. Analysts emphasize that the widening premium is unsustainable and that a correction is likely once market enthusiasm cools. The official NAV release on September 20 will provide a clearer picture of the premium's magnitude. For now, the consensus among experts is clear: avoid chasing the rally at elevated premiums. Instead, wait for a pullback to more reasonable levels. The fund's long-term prospects remain tied to the performance of its holdings and the broader Taiwan tech sector, but short-term risks are high. As one analyst put it, 'Don't chase; wait for a dip to buy.'

The bottom line

• 00981A's price hit a record high of NT$25.98, with daily volume exceeding 65 million shares.
• The ETF's premium over NAV doubled to 0.6%, signaling overheating and potential correction.
• Analysts advise against chasing the rally and recommend waiting for pullbacks.
• The fund's assets neared NT$20 billion, with beneficiary count surging to nearly 500,000.
• Long-term fundamentals remain strong, but short-term risks from excessive premium are significant.
• Investors should monitor official NAV data and volume-price patterns for signs of distribution.