This Pure Play Represents 85% of the Taiwanese Market

Our coverage on single-country exchange-traded funds (ETF) brings us to iShares MSCI Taiwan Capped ETF (EWT), a fund that is incorporated in the United States and provides exposure to large and mid-sized companies in Taiwan.

EWT targets the equity market in Taiwan by holding only stocks that are traded on the Taiwan Stock Exchange. Since its launch in 2000, EWT has amassed $2.92 billion in total assets and has retained its robust liquidity with a high daily trading volume, far outranking its competition.

In fact, many investors consider EWT the most stable Taiwan play going into 2017. The potential benefit of investing in EWT instead of a more broad-based emerging market ETF is that investors could gain a great deal more from a growing Taiwanese economy by buying shares of EWT.

The fund is intended to replicate the top 85 of the Taiwanese stock market, in terms of market capitalization. EWT is a heavyweight player in the technology sector, with 55 of the funds assets invested in technological companies. Financial services and basic materials are the other two major sectors for the fund, composing 18.3 and 10.5 of EWTs portfolio, respectively.

The funds top five holdings are Taiwan Semiconductor Manufacturing Co Ltd, 22.28; Hon Hai Precision Industry Co Ltd, 8.64; Cathay Financial Holding Co Ltd, 2.69; Chunghwa Telecom Co Ltd, 2.62; and Formosa Plastics Corp, 2.46. The funds focus on the Taiwan market makes it non-diversified, so investors need to diversify their portfolios with other investments.