Taiwan’s equity market has been red-hot for most of 2014, impressively out-performing benchmarks such as the MSCI Pacific ex-Japan Index, or the representative ETF EPP (iShares MSCI Pacific ex-Japan, Expense Ratio 0.50%) as well as the MSCI EAFE Index, and this presents the opportunity to discuss EWT (iShares MSCI Taiwan, Expense Ratio 0.61%) amid recent options activity there.
We have seen some hedging recently via options in EWT, with action specifically involving the August 16 puts on heavy trading volume in the underlying ETF.
After trading at a recent intraday high of $16.31 yesterday, the fund has reverted somewhat, today down about 0.30%.
EWT currently holds $3.2 billion in assets under management and has added about $16 million in new assets YTD, making it not only the largest pure-play way to invest in Taiwan via an ETF but also the third largest “Asia Pacific Equity” ETF in the U.S. landscape behind EPP and EWY (iShares MSCI South Korea, Expense Ratio 0.61%).
First Trust also offers a Taiwan Equity focused product in FTW (First Trust Taiwan AlphaDEX, Expense Ratio 0.80%) but the fund remains rather undiscovered with below $2 million in AUM and very low average daily trading volume.
After relatively large gains in Taiwanese equities thus far this year, it makes sense that some long holders may be eager to protect these gains as corporate earnings season comes upon us in the next few weeks and it is worth noting that EWT will be rather sensitive to one name, that being Taiwan Semiconductor (TSM), making up >20% of the underlying index.