The Fubon technology ETF, the first to come from the island, was launched on the Taiwan Stock Exchange on Tuesday and the appointment of BoNY as a service provider marks the latest step in the relationship between the two.
BoNY says for the past 12 months it has been actively engaged with Fubon in a process of knowledge transfer. By sharing its experiences as a third-party provider of ETF services, it has ensured that the asset manager is able to manage the day-to-day aspects of the ETFÆs operations.
"During numerous conference calls and onsite meetings in New York and Taipei, our staff has worked closely with Fubon personnel to review every aspect of ETF product development, index replication, basket settlement, and fund management,ö says Andrew Gordon, BoNYÆs executive vice president of its Asia-Pacific group. ôThe Bank of New York has a long-standing and close relationship with the Fubon group, which we are delighted to expand by assisting them with the launch of this technology ETF in Taiwan.ö
Victor Kung, president of Fubon Asset Management, says BoNY has provided his firm with "the best consulting expertise in the market". "With its successful and comprehensive servicing capabilities in the world ETF markets, the collaboration of The Bank of New York and Fubon is deemed to greatly help TaiwanÆs ETF market movement in the future.ö
BoNY predicts the EFT market in Asia will expand rapidly as retail investors and advisors increasingly view the funds as a useful investment option. Assets in Asian ETFs now amount to approximately $58 billion.
ôInitially ETFs were used exclusively by institutional investors as tools for index arbitrage, as a substitute for futures contracts and as hedging vehicles, but during the last several years retail investors and their advisors have begun to embrace ETFs within their own portfolios,ö says Gordon. ôAs a broader range of products have become available, investors have learned how to use ETFs actively within their portfolios to obtain diversification while employing a variety of asset allocation and sector rotation strategies to maximize return while reducing risk.ö