Can You Still Buy Active ETFs? Experts Share 'Priority Watchlist' for Strategic Entry During Sharp Dips

Recent turbulence in Taiwan's stock market saw the weighted index surge 1,783 points on the 21st, marking the largest single-day gain in history. On the financial program 'Wealth Path Forward,' analyst Chen Wei-Tai advised retail investors to strategically position themselves in active ETFs during sharp market corrections. According to Chen, professional fund managers are typically better at identifying short-term turning points, and more than half of active ETFs have historically outperformed the broader market during rebounds.

Chen highlighted the 'Uni-President Global Innovation 00988A' ETF, which holds major semiconductor and passive component stocks such as Micron, Samsung, Kioxia, SanDisk, Yageo, and Taiyo Yuden. Despite passive components being among the hardest-hit sectors—remaining weak even on the day of the market's historic rally, with stocks like Nippon Electric Trading nearly hitting the lower limit and Walsin Technology briefly approaching it—active ETF managers maintained significant exposure.

Why did fund managers accumulate so many passive component stocks? Chen explained that analysts with industry research backgrounds often base decisions on EPS forecasts and target prices. As long as the target price hasn't been reached and fundamentals remain sound, buying continues. The initial purchases by funds like 00991A created a bandwagon effect, forcing peers to follow suit to avoid underperformance, leading to concentrated holdings across active ETFs.

Active ETFs exhibit higher volatility. On the 21st, while the weighted index rose 4.2%, several active ETFs surged over 5%, including 00980A, 00400A, 00996A, 00992A, 00981A, 00993A, 00995A, 00994A, and 00406A. This outperformance underscores their potential during market reversals.

For retail investors, Chen recommends entering active ETFs on the second or third day of a panic sell-off, allowing time to assess true market bottoms. While ideal portfolio management involves cutting losers and holding winners, few individual investors can execute this perfectly. Active ETFs offer a practical alternative by leveraging professional discretion.

For income-focused investors, ETFs like the 'Active Allianz Taiwan High Dividend' or 00406A, which employs covered call strategies to generate premium income, are better suited for regular dollar-cost averaging. These funds offer smaller net asset value fluctuations and provide steady income during consolidation or correction phases.

Market-cap-weighted ETFs, on the other hand, are unlikely to surge as leading stocks show divergent performances. Chen suggests holding them for core exposure only. High-dividend ETF 00731, set to distribute dividends in August, presents a strategic entry opportunity at current lower levels.