Millionaire Investors Boost Domestic Funds in July: 91% Heavily Focus on Taiwan Stock Funds, Says Hengyuan Fund

Global financial markets have experienced heightened volatility in 2026, yet high-net-worth investors have not retreated—in fact, they’ve accelerated their asset allocation. According to Hengyuan Fund, clients investing over TWD 10 million saw a 170% year-on-year increase in subscription amounts during the first seven months of 2026. This indicates that market turbulence has not dampened investment appetite; instead, it has prompted wealthy investors to actively rebalance their portfolios. Notably, this capital shift is not only larger in scale but also shows a clear shift in market and fund type preferences.

Data from Hengyuan Fund reveals a significant reduction in allocations to offshore funds, bond funds, and balanced funds, with capital rapidly flowing into domestic equity funds. From January to July 2026, the share of domestic fund subscriptions rose from approximately 35% in the same period of 2025 to 64%. The proportion of equity funds increased from 63% to 81%. Domestic equity funds accounted for about 56.3% of total subscriptions, becoming the primary destination for high-net-worth investors this year.

Zhang Rongren, General Manager of Hengyuan Fund, noted that this trend shows high-net-worth clients are not simply de-risking during market volatility but are strategically reallocating capital toward higher-growth markets.

Zhang emphasized that upon closer examination of capital deployment, wealthy investors are increasingly concentrating on Taiwan stocks. In domestic equity fund subscriptions during the first seven months of 2026, Taiwan stocks accounted for 73.9%, information technology stocks for 12.1%, and Taiwan small- and mid-cap stocks for 5.4%. The top three categories combined reached 91.3%, a significant increase from 78% in the same period of 2025.

Zhang stated that the heavy focus on Taiwan stocks, IT, and small-cap equities reflects investors’ strong confidence in the long-term industrial trends driven by AI. Market volatility, rather than deterring investment, has become a strategic window for high-net-worth clients to reposition their portfolios.

Beyond industrial trends, tax efficiency has become a key factor in asset allocation decisions for high-net-worth clients. Zhang pointed out that the recent AI-driven surge in overseas equities and fund assets has led to increased offshore allocations, drawing greater attention to foreign-sourced income and minimum tax liability. For investors with larger portfolios, the difference between returns and tax costs is increasingly significant. The shift toward domestic funds this year reflects a growing emphasis on balancing 'return and tax efficiency' in investment decisions.

Zhang explained that under current regulations, capital gains from redeeming domestic funds in Taiwan are exempt from income tax and are not included in the minimum tax base. Even if a domestic fund invests in overseas stocks, investors holding such funds benefit from domestic tax rules. In contrast, gains from offshore funds are treated as foreign-sourced income and may require reporting and trigger minimum tax obligations once certain thresholds are met. For investors with existing foreign income or long-term offshore holdings, investing in global markets through domestic funds allows them to maintain global exposure while simplifying tax compliance and enhancing allocation flexibility.

Zhang concluded that high-net-worth clients in 2026 are not avoiding volatility but are using it as an opportunity to reconfigure their assets. The surge in subscription amounts, rising share of domestic equity funds, and concentration on Taiwan and tech stocks demonstrate that wealthy investors remain actively seeking growth opportunities. AI remains a core long-term industrial theme, and Taiwan’s robust technology supply chain offers a competitive advantage. While pursuing returns, investors are placing greater emphasis on risk and tax efficiency, making domestic equity funds a key option for portfolio reallocation this year.

*Disclaimer: The individual stocks, funds, and futures products mentioned in this article 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.