Taiwan Stock Swings Put Active ETFs to the Test

Taiwan’s equity market endured sharp swings in July before the benchmark recovered to finish in positive territory, providing an early stress test for the rapidly expanding active ETF segment. Unlike passive funds that track an index, active products depend on portfolio managers to rotate holdings, manage exposure and limit drawdowns, making stock selection and risk controls especially important during abrupt market reversals.

Among 20 Taiwan-focused active ETFs with at least one month of operating history, only nine posted positive returns over the latest one-month period despite the broader market’s recovery. Nomura Asset Management Taiwan’s Active Nomura Taiwan Select and Active Nomura Taiwan High Dividend funds led the group, highlighting a widening performance gap among managers during July’s selloff and rebound as portfolio positioning determined which products kept pace.