In the midst of challenging market conditions in 2021, exchange-traded fund (ETF) providers pushed their creative skills to higher levels to come up with innovative strategies that can provide access to new investment markets, sectors or themes that may not have been previously available to investors, such as clean energy, renewables, real estate investment trusts, etc.
Sustainability ETFs, or those focused on environmental, social, and governance (ESG) investing, continued to grow in popularity among investors in the past year. These ETFs are proving that sustainability ETFs are in strong demand among investors and can perform well even in challenging market conditions.
New ETFs with innovative investment strategies provide investors with a broader suite of products to choose from, allowing for better diversification, offering an optimum combination of new structures, good performance, and lower tracking error.
However, some newly-launched ETFs, being fresh in the market, may suffer from birth pangs such as poor tracking error which could leave investors making less money than those who invest in more established ETFs with better performance.
It is in this context that The Asset Triple A ETF Awards 2022 recognizes the most innovative ETFs and leading sustainability ETFs in the market over the past year.
The Asset Triple A ETF Awards 2022 gives recognition to sustainability ETFs with strong AUM (assets under management) growth and good track record that have performed well through different market cycles.
This year’s winners of the Sustainability ETF awards are:
CTBC Taiwan ESG Leading Semiconductor ETF
This is the first Taiwan equity ETF focused on the Taiwan semiconductor industry. This ETF has similar components to existing non-ESG semiconductor ETFs that are already popular among investors. Since its launch on May 20 2021, this ETF has garnered US$369.5 million, becoming the second largest and most popular Taiwan equity ETF listed in 2021 and the ninth largest Taiwan equity ETF overall. Since its initial public offering (IPO), the trading volume of this ETF has been within the top five among Taiwan equity ETFs consistently. This is the first time that this ETF is being recognized as a sustainability ETF by The Asset.
Yuanta FTSE4Good TIP Taiwan ESG ETF
Launched on August 23 2019, the Yuanta FTSE4Good TIP Taiwan ESG ETF was already recognized by The Asset in 2020 as one of leading sustainability ETFs in the Taiwan market. It was the first ESG-themed ETF in Taiwan. It closely tracked the performance of FTSE4Good TIP Taiwan ESG Index. It has continued to be popular among investors, posting a 58% growth in AUM to NT$10.79 billion (US$361.6 million) in May 31 2022 from NT$6.83 billion in October 10 2020.
Fubon TWSE Corporate Governance 100 ETF
The Fubon TWSE Corporate Governance 100 ETF continues to be one of the most popular sustainability ETFs in Taiwan, posting AUM growth of 132% to NT$14.73 billion as of May 31 2022 from NT$6.34 billion on October 31 2020. Billed as the first ETF in Taiwan to invest based on corporate governance, it was recognized by The Asset as one of the leading sustainability ETFs in 2020. This ETF adopts a dual-system approach in qualitative and financial index quantitative analyses, constructs indexed investments, and pursues long-term stable investment benefits from Taiwan stocks.
MOST INNOVATIVE ETFs
Cathay Global Autonomous and Electric Vehicles ETF
The Cathay Global Autonomous and Electric Vehicles (EV) ETF, launched by Cathay Securities Investment Trust (Cathay SITE) on June 21 2021, was head and shoulders above the competition and is recognized as the winner of the Most Innovative ETF award in Taiwan.
It has the distinction of being the first and largest EV thematic equity ETF in Taiwan, as well as the largest thematic ETF IPO in terms of AUM and number of beneficiaries in 2021. It is also the fourth largest EV thematic ETF worldwide with US$724 million in AUM and 160,353 beneficiaries as of January 26 2022. It also has a tracking error of 1.5%, which is within the acceptable level of 2.0% for an overseas (non-Taiwan) ETF.
Electric vehicles with its universal application are possibly the most important trend as the world ramps up the adoption of renewable energy. Cathay SITE has noticed the trend since 2020 and hopes to provide an index investment opportunity to Taiwan investors in the early stage through this ETF.
Fubon FTSE Vietnam ETF
The Fubon FTSE Vietnam ETF, launched by Fubon Asset Management on April 19 2021, is recognized as The Most Innovative ETF (Highly Commended). This is the first Vietnam single-country domestic thematic ETF in Taiwan and has accumulated NT$13.07 billion in AUM as of December 2021.
This ETF impressed investors and ETF providers as it displayed Fubon’s strong capability in Vietnam, which is benefiting from US-China trade tensions, demographic dividends, rapid economic development, and significant foreign investments. In 2021 Vietnam also became the largest frontier market on the FTSE Vietnam 30 Index, with an exceptional opportunity to become an emerging market.
Despite a relatively high tracking error, the Fubon FTSE Vietnam ETF is worth recognizing because of its potential to generate stable and long-term returns from the Vietnam stock market, considering the limitations of foreign investments in that country.
CSOP Huatai-PineBridge CSI Photovoltaic Industry ETF
The CSOP Huatai-PineBridge CSI Photovoltaic Industry ETF, launched on June 21 2021 by CSOP Asset Management, is recognized as the winner of the Most Innovative ETF award for Hong Kong. It has the distinction of being the first pair of ETFs under the ETF Cross-Listing Scheme between the Hong Kong and Shanghai stock exchanges, successfully listing the China onshore listed ETF in Hong Kong and enabling global investors to capture investment opportunities from China’s world-leading photovoltaic industry.
This is also the first time that a Hong Kong ETF issuer has introduced market makers for the master and sub-ETF across the two markets, paving the way for the ETF Connect. CSOP Huatai-PineBridge CSI Photovoltaic Industry ETF tracks the performance of the CSI Photovoltaic Industry Index. As the ETF is listed on the HKEX via the Cross-Listing Scheme, the creation and redemption need to be executed via market makers.
Although its AUM and tracking error are not available, this ETF is worth recognizing for its pioneering features, paving the way for more ETFs of its kind to trade in the Hong Kong-China market.
CSOP iEdge S-REIT Leaders Index ETF (SRT/SRU)
The CSOP iEdge S-REIT Leaders Index ETF (SRT/SRU), launched by CSOP Asset Management on November 18 2021, adopts a full replication strategy to track the performance of the iEdge S-REIT Leaders Index to present the investment opportunities of the S-Reit market in Singapore. The product is also known for its largest inception size of more than S$117 million (US$84.4 million) among all Reit ETFs on the Singapore Exchange. As of December 31 2021, SRT/SRU has attracted over US$85 million in investment. It also attracted investors from Japan, Korea and Taiwan to the Singapore’s Reit ETF market for the first time.
Although its AUM and the tracking error are not available, this ETF is worth recognizing for its pioneering features that pave the way for more ETFs of its kind to bolster the Singapore market.
Tabula Haitong Asia ex-Japan High Yield Corp USD Bond ESG UCITS ETF
The Tabula Haitong Asia ex-Japan High Yield Corp USD Bond ESG UCITS ETF, launched by Haitong International Asset Management – Hong Kong (HTIAM) on September 21 2021, is the world’s first Asia high-yield corporate USD ESG bond ETF listed in London. It tracks the iBoxx MSCI ESG USD Asia ex-Japan HY Capped Index, jointly developed by Tabula, IHS Markit and HTIAM. It has US$272.8 million in AUM as of May 31 2022.
This ETF leverages HTIAM’s expertise in the Asian high-yield bond market and MSCI’s robust ESG database, providing European investors access to the Asian high-yield market, especially China real estate, while enhancing liquidity, ESG profile, and diversification..
This ETF is worth recognizing as it provides European investors access to investment opportunities in the Asian high-yield market, particularly China, and paves the way for similar products in the future.
For the full list of winners please click here