How to Choose ETFs During Taiwan Stock Market Volatility? This Fund Outperforms 0050 in Downside Protection — Experts Reveal 3 Key Traits: Top Pick for Buying the Dip

Taiwan's stock market has recently entered a period of intense volatility. After plunging 3,000 points on the 17th, it surged over 1,000 points at the opening on the 21st, creating a rollercoaster-like experience that has left many investors emotionally drained. As a result, numerous investors are stepping back from individual stocks and turning to ETFs for risk diversification. But in this volatile environment, how should one choose the right ETF?

Financial expert Ku Yu addressed this question in a Facebook post, highlighting that during market uncertainty, the active ETF 00407A has demonstrated strong downside resilience. Its threefold momentum accumulation logic turns market corrections into accelerators for wealth growth.

During this turbulent phase in the Taiwan stock market, which ETF should investors choose? Is it the widely held 0050, 006208, or 009816 that better preserves value and resists declines?

Ku Yu pointed out that Taiwan's stock market has been continuously volatile, with one Friday seeing a sharp correction of nearly 2,950 points, leaving many investors anxious about their holdings. However, as he has previously emphasized, for long-term investors, market corrections are like irregularly scheduled 'discount sales'—the perfect time to lower costs and accumulate more shares.

While similar ETFs fell nearly 8%, 00407A dropped only 5.4%—data confirms the fund manager's 'active defense'

Ku Yu noted that during the market pullback from June 24 to July 15, most peer active ETFs declined between -6.6% and -8.4%, while 00407A fell only -5.4%, demonstrating stronger downside protection. This shows that the fund manager's 'active stock selection and flexible adjustments' can indeed provide a degree of risk defense during market downturns.

More importantly, Ku Yu highlighted the fund's mechanism: 00407A adopts a 'no-distribution, reinvestment' strategy. Many assume ETFs must pay dividends, but in reality, retaining earnings is the faster path to asset growth. With the market currently in a 'discount sale,' reinvesting dividends allows investors to accumulate more shares at lower prices, leading to higher total returns when market panic subsides.

Ku Yu analyzed 00407A's 'threefold momentum' accumulation logic:

- Active Stock Selection: A quantitative system combined with a research team dynamically selects high-growth potential stocks to outperform the broader market. - Compound Growth: Dividends are retained within the fund and reinvested into the next growth cycle, allowing capital to grow like a snowball. - Market 'Mood Swings': Strong fundamentals and earnings remain intact, but market panic creates bargain prices, enabling investors to buy more at lower costs.

Ku Yu noted that 00407A is currently trading at around NT$8.58, below its NT$10 issue price—offering a 'sweet deal.' At this discounted price, investors gain access to both 'active downside-resistant stock selection' and 'automatic compound accumulation,' making it a compelling option for long-term investors aiming to build total returns during this market pullback.