Taiwan Stock Funds Lead, Active ETFs Lag Behind: Chinex Fund Says AI Demand Unchanged, Volatility Offers Long-Term Buying Opportunity

Following last July's intense market volatility, the performance rankings of Taiwan equity investment instruments have reshuffled in 2026. According to the latest statistics, Taiwan stock funds and passive ETFs continue to deliver average returns above the benchmark, while previously high-performing active ETFs have now underperformed the Taiwan Weighted Index. With recent rebounds in the Taiwan stock market, questions arise: Is this a true bottom, or merely a technical bounce? On the 6th, Chinex Fund stated that assessing the market outlook requires more than tracking index movements—it demands understanding whether the correction stems from cooling capital flows or deteriorating fundamentals. If corporate earnings and economic conditions remain stable, current volatility could present a prime opportunity for long-term positioning.

According to Lipper Global data, Taiwan small- and mid-cap equity funds achieved an average return of 59.3% in the first half of 2026, topping all Taiwan equity investment categories. The best-performing fund in this group doubled its value. Broad Taiwan stock funds posted an average return of 51.9%, with top funds reaching 98.7%. Passive Taiwan ETFs delivered an average return of 51.6%, slightly outpacing the Taiwan Weighted Index’s 50.8% gain. In contrast, active ETFs averaged only 45.8% return—making them the sole Taiwan equity instrument to trail the benchmark, highlighting the resilience advantage of flexible fund management and diversified holdings during July’s sharp market correction.

Zhang Rongren, General Manager of Chinex Fund, noted that the recent rebound doesn’t mean the market has fully stabilized. Investors should instead assess the nature of the decline. If the downturn results from valuation corrections and position adjustments after a rally—and if corporate profits and end-market demand remain robust—equity markets typically regain stability as selling pressure dissipates. The real concern is a recessionary bear market marked by weakening order books, declining profits, and slowing economies. Current observations suggest the former scenario prevails. Therefore, investors should remain patient rather than altering long-term strategies due to short-term swings.

Zhang emphasized that Taiwan’s most critical fundamental support continues to come from U.S. end-market demand. So far, relevant data show no clear signs of weakening.

For example, the U.S. ISM Manufacturing New Orders Index rebounded to 56.7 in July, firmly above the 50-point expansion threshold, indicating sustained business order inflow and end-market demand. Meanwhile, Taiwan’s June exports surged 40.3% year-on-year—slightly cooler than the previous month but still maintaining strong growth momentum. This reflects persistent strength in demand for AI servers, high-performance computing, and electronics supply chains. As long as U.S. demand remains stable, Taiwan’s exports and corporate earnings are likely to continue benefiting.

Regarding market volatility, Zhang advised that instead of trying to time the bottom, investors should establish disciplined, phased investment strategies. Historical data since 1967 show that whenever the Taiwan stock market drops more than 15% from its recent 60-day high, if the U.S. avoids recession in the following six months, the market’s average return over the next 1–3 years consistently remains in double digits. Even if the economy weakens later, long-term returns mostly stay positive. This indicates that short-term fluctuations are often sentiment-driven; as long as fundamentals hold, patient, consistent investing tends to outperform frequent trading.

Zhang added that every major market correction often presents a crucial window to accumulate high-quality assets. Investors can reduce emotional interference through systematic investing. Chinex Fund recommends leveraging its 'Super Bottom King' auto-top-up mechanism to increase allocations during market corrections, lower average holding costs, and turn volatility into a long-term advantage. Underpinned by long-term AI trends, export momentum, and sustained corporate profitability, investors stand a better chance of capturing Taiwan’s medium- to long-term growth potential.

*Disclaimer: References to individual stocks, funds, or futures products in this article are for informational purposes only and do not constitute investment advice. Investors should make independent judgments, carefully assess risks, and bear their own profits and losses.*