A prolonged downturn in semiconductor stocks would obviously be unkind to EWT and that scenario is being across some other ETFs as well. In addition to EWT, ETFs with large weights to Apple (NasdaqGS: AAPL) and Samsung are reminding investors that ETFs with 20% weights to a single stock do a poor job of mitigating single-stock risk.
Earlier this year, EWT climbed on hopes of a potential stock-trading link between Taiwan and Shanghai pushed shares higher – a similar program between Shanghai and Hong Kong has helped support a rally in both markets. Taiwanese authorities also recently introduced limits on foreign investments in the corporate debt market in an attempt to diminish inflows that strengthened the local currency.
Still, EWT’s recent price action belies its usually conservative reputation. With a three-year standard deviation of about 11%, EWT is one of the least volatile single-country emerging markets ETFs on the market.
iShares MSCI Taiwan ETF