Taiwan Stock Market's Powerhouse! Institutions Reveal the 'Shock-Resistant Solution' — 00881 Delivers 520% Return Over 10 Years

The U.S. earnings season effect has faded, triggering severe volatility in Taiwan's stock market, further amplified by institutional investors locking in profits. Cathay Asset Management advises investors to focus on fundamentals amid short-term sentiment swings, recommending 'dollar-cost averaging' to spread market entry risk. Among its offerings, the Cathay Taiwan Tech Titan ETF (00881-TW) strictly controls component stock weights, balancing growth potential from tech giants with portfolio diversification. Its tracked index has delivered a 10-year dollar-cost averaging return of 520.56%, making it not only resilient during market turbulence but also an ideal vehicle for long-term investors seeking exposure to Taiwan's AI vision.

Cathay Asset Management notes that AI has driven global markets higher for years, inflating investor appetite for earnings seasons and financial report-driven rallies. While retail investors hope to profit from quarterly earnings, institutional investors often use these periods to take profits and realize capital gains, contributing to short-term market declines. The firm urges investors not to let market sentiment disrupt their investment plans, emphasizing that decisions should ultimately be based on fundamentals. With Taiwan's long-term bullish trend intact, dollar-cost averaging remains the optimal strategy to diversify entry timing and steadily accumulate positions.

Sudingyu, fund manager of Cathay Taiwan Tech Titan (00881-TW), explains that the fund tracks the 'Taiwan Index Plus FactSet Taiwan Tech Leaders Communication Index,' which selects stocks from the communications technology supply chain based on liquidity, profitability, and market-cap weighting. The index imposes a single-stock cap and limits the cumulative weight of the top five holdings to 65%. Compared to traditional market-cap-weighted indices, which often carry higher sector concentration and volatility, 00881’s current top five holdings—TSMC, MediaTek, Delta, Hon Hai, and UMC—range from 3% to 40% in weight, reflecting the index’s design for diversification.

Beyond its superior index logic, a closer look at the past five years (2021/6/30–2026/6/30) reveals strong performance from 00881’s top holdings: TSMC (+343.2%), MediaTek (+527.8%), Delta (+619.5%), Hon Hai (+172.2%), and UMC (+311.2%). This robust performance has driven the fund’s outstanding returns: 154.35% over one year, 154.17% over two years, and 310.84% over three years—ranking among the top in its category. With rising price and volume, 00881 has become a trillion-dollar-tier ETF in Taiwan, further enhancing its liquidity advantage.

The popularity of 00881 is also evident from the stock exchange’s dollar-cost averaging ETF rankings. The number of DCA accounts for 00881 has surged 46% this year alone. Backtesting the index’s 1- to 10-year returns shows 79.33% over one year, 255.01% over five years, and 520.56% over ten years—far outperforming the Taiwan Weighted Index. No wonder it has become a breakout star in the ETF market. Amid market volatility, investors are advised to gradually add positions at lower prices, reducing average cost and securing long-term exposure to Taiwan’s AI semiconductor vision.

*Disclaimer: Mentioned individual stocks, funds, and futures products are for reference only and do not constitute investment advice. Investors should make independent judgments, carefully assess risks, and bear their own profits and losses.