Not 0050 or 0056! Amid Taiwan Stock Market Drop, This ETF Tops Monthly Growth: KGI Taiwan Weighted 2x (00685L) Adds 119,000 New Investors

After hitting a record high of 48,218.87 points on June 23, the Taiwan stock market entered a correction phase, falling 13% from its lows over the past month. However, investors have responded by buying more aggressively. According to the latest July 17 statistics from the Central Depository & Clearing Corporation, the total number of Taiwan stock ETF holders has surpassed 18.002 million, a new record. Since the beginning of the year, 5.828 million new investors have joined.

Notably, 33 Taiwan stock ETFs have reached all-time highs in investor numbers, and the top 10 by monthly growth have been revealed. Leading the list is KGI Taiwan Weighted 2x (00685L), which added 119,000 new investors, securing the top spot. Following are Yuanta Taiwan 50 (0050), Fubon Active Future 50 (00991A), Yuanta High Dividend (0056), and KGI Semiconductor Income (00927). This ranking shows that leveraged, high-dividend, and actively managed ETFs are all gaining retail investor support.

Leveraged 2x ETFs stand out particularly. Besides 00685L, there are currently four 2x leveraged Taiwan stock ETFs in the market, all attracting significant investor interest. Financial institutions suggest that during this volatile correction, retail investors are using leverage to amplify potential gains.

00685L’s rise to the top stems from three key advantages. First, its post-split share price is low, lowering the entry barrier for new investors. Second, its management fee of just 0.3% is the lowest among similar leveraged ETFs. Third, it offers strong liquidity, allowing for smooth trading. These factors have collectively driven a concentration of popularity among retail investors.

Hong Xiangyi, ETF manager of KGI Taiwan Weighted 2x, stated, “Fundamentally, AI demand remains strong in Taiwan stocks. Recent selling pressure in semiconductor stocks stems from crowded trades and expanded leverage, not weakening demand. This correction should be seen as healthy.” His comments have reassured investors and encouraged continued positioning during the pullback.

High-dividend ETFs also performed well. Yuanta High Dividend (0056) and KGI Semiconductor Income (00927) both made the top 10. Xie Mingzhi, manager of KGI Semiconductor Income, noted, “Taiwan stocks remain fundamentally strong in the medium to long term. While valuations may rise and volatility is inevitable, this doesn’t mean AI’s long-term fundamentals have weakened.” High-dividend ETFs, with their relatively stable components, offer ideal opportunities for long-term investors to buy on dips.

Additionally, Fubon Active Future 50 (00991A) ranked third in monthly growth, indicating that retail investors are no longer limited to passive index-tracking ETFs. Actively managed funds offer greater flexibility through manager stock selection, appealing to investors seeking higher adaptability during market swings.

This ranking reflects the diversified needs of Taiwan stock investors. Some chase amplified gains with leverage, others manage volatility with dividends, and some trust active managers’ insights. Yet all share the common mindset of buying on weakness.