TWSE Market Insights

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In recent years, ETFs have become an important instrument for domestic investors to participate in the capital market. From the early stage, when ETFs mainly tracked market capitalization-weighted indices, to the subsequent development of high dividend yield, industry themes, overseas markets, bonds, and multi-asset strategies, ETFs have gradually evolved from relatively simple index-based investment tools into important vehicles for investors to conduct asset allocation, capture market trends, and diversify investment risks. As the global ETF market continues to grow, Taiwan’s capital market may also draw on international developments as it advances toward greater internationalization and diversification.

Against this backdrop, Taiwan’s first Actively Managed ETF (Active ETF) was listed in May 2025, marking a new stage in the development of the domestic ETF market. For investors, this means more than the addition of several new products. More importantly, ETF investment instruments have begun to offer greater strategic differentiation, enabling investors to make more refined choices between passive tracking and active management according to their risk profiles, investment objectives, and market views.

Active ETFs have drawn market attention mainly because they combine the features of ETFs and active management. On the one hand, like other ETFs, Active ETFs are listed and traded on the securities exchange market and feature intraday trading, transparent trading prices, a creation/redemption mechanism, and information disclosure. On the other hand, their portfolios do not fully replicate a specific index; instead, professional investment teams select securities and adjust allocations based on market conditions, industry trends, company fundamentals, and risk control considerations. In other words, Active ETFs preserve the convenience of ETFs as trading instruments while introducing active management strategies, allowing investors to participate, via secondary market trading, in investment portfolios designed by professional managers.

Since the listing of the first product in May 2025, Taiwan’s Active ETF market has shown clear growth momentum within a short period. Based on statistical data, whether measured by number of products, assets under management (AUM), average daily trading value, or return performance, Active ETFs have become one of the most noteworthy categories in the ETF market. These figures reflect not only a rapid expansion in product supply, but also a rising level of investor understanding and acceptance of Active ETFs, which are gradually being incorporated into asset allocation and trading strategies.

Looking first at the number of products, there were 186 listed ETFs at the end of May 2025, including 183 Passive ETFs and 3 Active ETFs. By the end of May 2026, the total number of listed ETFs had increased to 220, including 195 Passive ETFs and 25 Active ETFs. In other words, within roughly one year, the number of Active ETFs increased from 3 to 25, an increase of 22 products.

The rapid increase in the number of Active ETFs reflects simultaneous changes in issuer and investor demand. For issuers, as competition in the ETF market becomes increasingly mature, products that simply track existing indices still have stable demand, while Active ETFs provide a new direction for product design. This allows securities investment trust enterprises (SITEs) to launch ETF products with more distinctive strategic features by leveraging their research, security selection, and asset allocation capabilities. For investors, as market conditions change rapidly and opportunities in sector rotation and thematic investment increase, some investors expect products to adjust holdings actively within a defined scope and respond flexibly to market changes.

In terms of product types, by the end of May 2026, Active ETFs were no longer limited to the earliest listed Taiwan equity active products. Subsequent products have gradually expanded to different categories, including overseas equities, global innovation, technology growth, high-dividend strategies, and fixed income. This development helps investors allocate assets according to their own needs. For example, investors who prefer to participate in the growth of Taiwan equities may use Taiwan equity Active ETFs to capture domestic sector rotation; those seeking exposure to global technology or innovation trends may choose relevant overseas or global Active ETFs; and investors pursuing income and risk diversification may also consider Active fixed income ETFs. The expansion of product scope means that Active ETFs are not merely products focused on a single market or theme, but are gradually becoming one component of broader asset allocation tools.

At the end of May 2025, AUM of listed Active ETFs stood at NTD 8.607 billion. By the end of May 2026, AUM of Active ETFs had reached NTD 866.411 billion, an increase of approximately NTD 857.804 billion. Aggregate AUM of listed ETFs increased from NTD 3.744198 trillion to NTD 7.515916 trillion.

The rapid expansion in AUM shows that Active ETFs have not only increased in number of listings, but have also attracted actual capital inflows. At the end of May 2025, Active ETFs accounted for only approximately 0.23% of aggregate AUM of listed ETFs; by the end of May 2026, the share had risen to approximately 11.53%. An increase from less than 1% to more than 10% within a short period indicates that Active ETFs have begun to gain a substantive position in the asset structure of the ETF market. For investors, rising AUM has multiple implications. First, growth in scale generally indicates an increase in market participants and that products are receiving attention and use from more investors. As ETF AUM gradually increases, it suggests that products are not merely attracting attention shortly after listing, but are able to continue meeting funding demand and become part of investors’ allocations. Second, larger AUM may help enhance market confidence in product stability.

Substantial growth in Active ETF AUM is also related to market conditions and product characteristics. From 2025 to 2026, investors continued to focus on issues such as AI, technology innovation, Taiwan equity growth, global industry trends, and income-oriented allocation. Through active security selection and dynamic adjustment mechanisms, Active ETFs can be designed in a manner that more closely reflects these market needs. When market themes change quickly, Passive ETFs usually adjust constituent securities and weights in accordance with index rules, with a relatively fixed adjustment schedule. By contrast, Active ETFs may be allocated by manager teams based on market judgments, leading some investors to view them as having flexibility in responding to market changes. This is one of the important reasons why Active ETFs were able to attract capital during the early stage. From the perspective of the asset management industry, the increase in Active ETF AUM also indicates a higher level of investor acceptance of “transparent and conveniently traded active management tools.” In the past, investors seeking to participate in active management strategies generally did so through mutual funds or discretionary investment mandates, while ETFs were often viewed as instruments for passive index tracking. Following the listing of Active ETFs, these two concepts began to converge. Investors can participate in active management strategies through securities accounts in the same way they trade ordinary ETFs, and can understand product investment directions through public information, bringing asset management services closer to the general investing public. In terms of fee structure, Passive ETFs usually have relatively lower fees because they track indices and their management processes are more standardized; Active ETFs involve research, security selection, and allocation adjustments, and therefore have a wider range of fee rates. Mutual funds vary more widely depending on fund type, distribution channel, and fee items.

Nevertheless, the rapid growth in AUM should be viewed rationally. While rising Active ETF AUM indicates emerging market demand, investors should note that scale is not a guarantee of future performance. The investment performance of Active ETFs still depends on the investment team’s market judgment, security selection capabilities, risk control, and the product’s investment scope. During rising markets, active allocation may have the opportunity to generate better performance; however, if the market reverses or investment judgments prove inaccurate, Active ETFs may also lag indices or experience greater volatility. Accordingly, AUM growth may be viewed as an important signal of improving market acceptance, but investment decisions should still be based on product understanding and risk assessment.

From a trading perspective, the market activity of Active ETFs has also increased significantly. Average daily trading value of Active ETFs was NTD 1.473 billion for 2025 and increased to NTD 15.987 billion for January to May 2026. Aggregate average daily trading value of listed ETFs increased from NTD 29.857 billion to NTD 71.681 billion.

In terms of market share, Active ETFs accounted for approximately 4.93% of aggregate average daily trading value of listed ETFs in 2025; from January to May 2026, this share had increased to approximately 22.30%. This indicates that although Active ETFs remain emerging products, their trading activity has risen rapidly and they have become an increasingly important segment of the ETF trading market.

For exchange-listed products such as ETFs, liquidity is one of the important factors investors consider when making investment choices. Even if a product’s investment strategy is attractive, if trading is inactive, investors may face wider bid-ask spreads when buying or selling, or may find it difficult to obtain desired prices in larger trades. The significant increase in average daily trading value of Active ETFs suggests that the market has developed a certain degree of trading depth. This not only benefits short-term traders in entering and exiting positions, but also makes medium- and long-term investors more willing to include such products in their portfolios, because when products have a certain level of liquidity, investors can adjust positions more flexibly in response to funding needs or market changes. Higher trading activity also reflects a higher level of market discussion around Active ETFs. Because Active ETFs allow room for manager-team decision-making, investors often pay attention to their investment rationale, changes in holdings, sector allocation, and performance differences. When certain industry trends or thematic topics receive strong market attention, related Active ETFs may become one of the instruments through which investors participate in such trends.

However, higher trading value does not mean that all Active ETFs have the same liquidity. Product scale, investment theme, listing history, investor attention, and market-making conditions may all affect trading performance. When trading, investors should still pay attention to trading volume, bid and ask quotations, premium/discount levels, and their own order placement methods, so as to avoid entering or exiting positions at unfavorable prices during periods of higher market volatility or lower liquidity. Although ETFs offer trading convenience, convenience does not mean the absence of risk. In particular, because Active ETFs differ by strategy, investors should also pay attention to the relationship between market price and fund net asset value (NAV).

From the perspective of returns, the total return performance, including dividends, of ETFs newly listed in 2025 during January to May 2026 also suggests that Active ETFs exhibited a certain degree of competitiveness. According to the data, among ETFs newly listed in 2025, there were 15 Active ETFs, including 13 equity ETFs; there were 17 Passive ETFs, including 14 equity ETFs. Focusing on equity ETFs, Active ETFs recorded an average total return, including dividends, of 65.89% from January to May 2026, compared with 54.85% for the Taiwan Stock Exchange Capitalization Weighted Stock Total Return Index (TAIEX Total Return Index) during the same period. Further examining the number of products outperforming the TAIEX Total Return Index, 9 of the 13 Active Equity ETFs outperformed the index, representing approximately 69.23%.

For investors, return figures attract the most attention, but also require the most careful interpretation. The competitive performance of Active ETFs during this period indicates that active management strategies may be able to play a role in specific market environments. Because Active ETFs are not completely constrained by index constituents and fixed weights, manager teams may allocate based on industry trends, corporate earnings, valuation levels, and market momentum. When market performance is driven by specific sectors or themes, if the investment team identifies the right direction, it may generate competitive performance. This is also an important reason why Active ETFs have received market attention. The advantages of Passive ETFs lie in clear rules, cost transparency, index tracking, and risk diversification, making them suitable as long-term core allocation tools. The features of Active ETFs, by contrast, lie in strategic flexibility and research-based judgment, which may provide different investment outcomes during periods of market structural change or sector rotation. The two are not substitutes for one another, but perform different functions. Investors may view Passive ETFs as foundational tools for steadily participating in overall market growth, while adding certain Active ETFs, in line with their risk tolerance and market views, as allocations for return enhancement or trend participation.

However, notable return performance does not mean that future results will necessarily continue; Active ETF performance may be above or below a benchmark depending on investment judgments and market conditions. The core of active management lies in the judgment of individuals and teams; therefore, performance is affected by investment processes, research quality, risk control, trading execution, and the market environment. When reviewing short-term returns, investors should avoid using past performance as the sole basis for decision-making. Instead, they should understand whether the product strategy meets their own needs and observe the stability of its long-term performance, degree of volatility, and performance across different market phases.

In addition, the total return, including dividends, of ETFs newly listed in 2025 during January to May 2026 represents a performance observation over a specific period. Because Active ETFs have only been listed for a short time, the currently observable period is limited, and short-term performance can be affected by market conditions, listing timing, and the popularity of investment themes. Therefore, these notable figures may be viewed as important early-stage results in the development of Active ETFs and may also indicate that their strategic flexibility has received initial market recognition. However, a longer period of observation is still needed to evaluate performance across bull and bear markets, range-bound markets, and different interest rate environments.

Taking together the four key indicators—number of products, AUM, average daily trading value, and returns—Active ETFs have, since their listing in May 2025, shown four outcomes: increased supply, capital inflows, more active trading, and notable performance. The number of products increased from 3 to 25, indicating a rapid expansion of product supply; AUM increased from NTD 8.607 billion to NTD 866.411 billion, indicating substantial capital inflows; average daily trading value increased from NTD 1.473 billion to NTD 15.987 billion, indicating a clear rise in market trading activity; and newly listed Active Equity ETFs in 2025 recorded an average total return, including dividends, of 65.89% during January to May 2026, with 9 of 13 products outperforming the TAIEX Total Return Index, indicating early-stage performance of active management strategies recognized by the market.

These four indicators are interrelated rather than independent. An increase in the number of products provides more product choices and attracts investors with different needs into the market. An expansion in AUM enhances product stability and market confidence, further increasing investors’ willingness to allocate. Higher trading value improves trading liquidity, making products easier for investors to use. Notable performance strengthens market attention on Active ETFs and encourages more investors to study and participate in them.

For Taiwan’s ETF market, the rise of Active ETFs has structural significance. In the past, the ETF market was dominated mainly by Passive ETFs. Investors participated in the market through ETFs largely by tracking indices to obtain average market returns. This model offers advantages such as low cost, transparency, and risk diversification, and remains the foundation of ETF market development. However, as the market becomes more mature, investor needs naturally become more diverse. Some investors still prefer the stability and clear rules of Passive ETFs, while others hope to incorporate professional judgment and strategic flexibility within the ETF structure. The emergence of Active ETFs responds to this change in demand.

The development of Active ETFs also helps enhance the competitiveness of Taiwan’s asset management industry. Through Active ETFs, securities investment trust enterprises (SITEs) are no longer only issuers of index products; they can also make research capabilities and investment management capabilities the core value of their products. This will encourage issuers to place greater emphasis on the professionalism of investment teams, strategy transparency, risk control, and investor communication. As more Active ETFs compete in the market, investors can also compare the management capabilities of different teams through performance, risk, and portfolio holdings information, further promoting the professionalization and differentiation of the asset management industry.

For general investors, the most direct significance of the rapid development of Active ETFs is that they provide a more convenient way to access professional investment strategies. In the past, investors seeking active management may have needed to invest through mutual funds, whose trading methods differ from those of ETFs and do not provide intraday trading features. Active ETFs allow investors to trade through securities accounts on the TWSE centralized securities exchange market, in the same manner as stocks and ETFs, thereby lowering the threshold for participation. This means that active management strategies are no longer confined to traditional fund structures, but can be presented in a form that is more closely aligned with market trading practices.

Second, Active ETFs may help investors participate in market trends. As industries change at a faster pace, Active ETFs can adjust allocations to different industries, individual securities, or regions based on the judgment of investment teams, enhancing product adaptability to market conditions. Active ETFs provide an option between self-directed security selection and passive investment, giving investors an opportunity to participate, through a single product, in portfolios selected by professional teams.

Third, like Passive ETFs, Active ETFs can help investors diversify single-stock risk. Many investors may be optimistic about an industry trend but may not be able to determine which company has the greatest investment value. Directly investing in a single stock may expose them to higher company-specific risk.

Fourth, Active ETFs make it easier for investors to establish a core-and-satellite allocation. For long-term investors, Passive ETFs may serve as core positions that provide overall market exposure, while Active ETFs may serve as satellite positions to supplement specific markets, sectors, or strategies. For example, investors may use broad-market ETFs to capture long-term market growth, while pairing them with certain Active ETFs to participate in themes such as technology innovation, Taiwan equity selection, high-dividend allocation, or global growth. This approach allows portfolios to avoid relying on a single investment logic and to balance stability and flexibility.

The rapid growth of Active ETFs does not mean that the importance of Passive ETFs has declined. On the contrary, the data show that the number of Passive ETFs, AUM, and average daily trading value have continued to grow and remain the main foundation of the listed ETF market. As of the end of May 2026, there were 195 Passive ETFs, with AUM of NTD 6.649505 trillion and average daily trading value of NTD 55.694 billion during January to May 2026, indicating that Passive ETFs continue to have a solid market foundation and investor trust.

Passive ETFs offer lower costs, clear rules, and market representativeness, making them important tools for investors to build long-term core positions. Active ETFs provide strategic flexibility, thematic exposure, and professional security selection, making them important options for investors to adjust allocations under different market conditions. As both types of products develop together, the ETF market will be able to serve more diverse investment needs and enhance the overall depth of the capital market.

From the perspective of market systems, the development of Active ETFs also makes information disclosure and investor education more important. Because the portfolios of Active ETFs are adjusted according to the judgment of manager teams, investors need to understand actual investment directions through public information. Product names may indicate strategic features, but they cannot fully represent portfolio holdings. Investors should develop the habit of reading prospectuses, monthly reports, portfolio holdings information, and risk disclosures, and should pay attention to the premium/discount between ETF market price and NAV. Only when information transparency and investor understanding improve together can the Active ETF market develop in a healthy manner.

For investors, the emergence of Active ETFs provides more possibilities, but it also requires investors to develop a more comprehensive understanding of products. Although data on number of products, scale, trading value, and performance may be notable, investment decisions should still return to investors’ own needs and risk tolerance. Investors should understand the differences between Active ETFs and Passive ETFs, identify the investment strategies of different products, and, while pursuing returns, remain mindful of market volatility, premium/discount, liquidity, and management risks. Only in this way can Active ETFs truly become one of the options that help investors participate in market growth and optimize asset allocation.

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