About SITCA

About SITCA > Organization > Chairman


  In 2016, we experienced incidents that compounded to the volatility of the international market such as the two trading curbs induced by the crash of China’s A shares, the implementation of negative interest rate policy in Japan and Europe, the withdrawal of the United Kingdom from the European Union, the continuous depreciation of Reminbi, and the US Presidential election. Coupled with the decline in exports, an observing market sentiment, tightening of the Taiwan’s stock market, have all made the domestic money market fund (MMF), and Taiwan equity fund suffer the most serious decline in 2016, a decline of 14.55% compared to last year.
Chairman:Jeff Chang
  Overall, by the end of 2016, the total asset under management of the SITE and SICE industry decreased slightly from NTD3.6064 trillion to NTD3.5889 trillion, of which the asset size of privately placed fund grew from NTD13.2 billion to NTD33.4 billion, and the asset size of the discretionary investment increased from NTD1.3896 trillion to NTD1.4287 trillion, with only onshore mutual fund listings decreased from NTD2.2037 trillion to NTD2.1235 trillion. The changes in the size of total assets under management is not significant with different fund types experiencing slight gains and drops. Next, the size of the money market fund (MMF) and Taiwan equity fund have decreased by NTD146.3 billion and NTD29.4 billion respectively amid a micro-profit environment and shrinking trading volume of Taiwan stocks. In recent years, the ETFs are the most popular fund with the largest growth in AUM, reaching NTD58 billion. As for offshore fund, the holdings of domestic investors decreased slightly from NTD3.0842 trillion to NTD3.0781 trillion.
  Observing the reasons for the slow growth of the fund industry in recent years, beside the continued decline in the size of Taiwan equity fund from the reduced trading volume in Taiwan equities, the highly homogeneous products in the current market with the product line and development near the saturation point could all be the contributing factors. Therefore, there is a need to develop or introduce new types of commodities to meet the needs of investors. According to the survey data, Taiwanese investors’ fund investments only account for 1.36% of the overall asset allocation which is far less than Europe, Japan and America, which means that there is considerable room for growth in Taiwan’s asset management industry. In order to transform and develop, the Association plans to focus on the following items with the assistance of member companies:
  Open Private Equity Fund Business for SITEs
           Taiwan has long been in a low-interest environment resulting in insurance companies and other institutional investors seeking higher yield investment opportunities, and it is a pity that the huge amount of money is been used abroad. As a matter of fact, institutional investors such as insurance companies are highly interested and willing to invest in the infrastructure of Taiwan namely energy, long-term care, and digital industry. Overseas, Private Equity Fund (PE Fund) is the most important business of the asset management industry (fund companies), and under the fiduciary mechanism, the original complexity of the entity business’s financial project combined with the financial engineering are been redesigned to possess stable cash return or with different target rate of return for the private equity fund products, and introducing institutional investors to participate.
Since the current investment scope of onshore funds is mainly restricted on securities and limits on financial investment, the SITE funds cannot get involved in physical fund raising activities and are also unable to provide such a product that is widely accepted by institutional investors overseas. Thus, the Association is committed to promote the opening of this business, and pursue the support and coordination of all sectors to amend relevant law and regulation in the hopes to pursue a win-win opportunity for the government, institutional investors, the public and the asset management firms.
  Introducing the Individual Savings Account (ISA)
           Referencing the establishment of “Individual Saving Accounts (ISA)” abroad, where United Kingdom and Canada have implemented ISA for many years, the ISA is most beneficial to the accumulation of national wealth by encouraging the public to make long-term investment. Japan and Korea have implemented the ISA respectively in 2014 and 2016 in order to provide the public the opportunity to accumulate wealth in the low interest rate, low growth and high inflation macroeconomic environment, as well as effectively use household assets to promote economic growth. Looking at the implementation of various countries with effective results, such policy serves as a good model of reference for Taiwan.
According to the Association’s statistics, the scale of Taiwan equity fund totaled at NTD525 billion in 2007, but by the end of 2016 it was reduced to NTD180 billion. In recent years, the trading volume of Taiwan shares has been shrinking dramatically. In order to improve the overall trading volume of Taiwan stock market, the Association will recommend the government to refer to regulations on insurance premiums included in the itemized deduction for income tax, giving the public similar incentive while investing in funds, and in collocation with the pension preparation policy, making it the third important pillar in the public pension reserve. By encouraging investors to purchase Taiwan equity funds in batches or follow the regular savings plan, it will generate inflow of capital that stimulates the Taiwan’s stock market and boost the size of Taiwan equity fund.
  Promotion of Member Choice in Labor Pension
           It is now an international trend to open the labor pension investments to be self-managed by the labors. Advanced countries such as the United States of America, Hong Kong, Singapore, Australia and other countries have already implemented the member choice mechanism. For labors, the opening of the member choice mechanism can provide them with a variety of choices that will help the overall planning of retirement life, and at the same time reduce the financial burden of the government and promote the healthy growth of the domestic financial industry. The Association advocates the promotion of building a member choice mechanism in labor pension with the option of investing in government operated and private institution operated funds. Under this system we can provide the labors both the choice of government-managed funds that guarantees sustainable returns and private retirement financial products. This means that those who can afford the risks can choose to manage their own pension and take responsibility in the profit and loss, and those who cannot afford the risks can choose the government-managed funds with guaranteed returns.
Currently, the government is actively promoting pension reform. However, after the pension reform, we may face the reduction of pension contribution from the labor insurance, therefore the government should prepare a member choice mechanism in labor pension to compensate the financial gap in the future. The Association appeals for the completion of relevant legislation as soon as possible, so that member choice mechanism can be effectively implemented. As labor pension affairs could impact many different levels of society, the Association proposed to the competent authority to invite financial related businesses to get together and plan the process of member choice, review the investment objects, as well as the types of investment objects that can be made available so that the pension investment mechanism can be holistically developed.
  On top of the abovementioned items for industry transformation, in terms of the long-term development of the industry, the Association and its member companies will focus on internationalization and technological advancement as the major goals. In face of the changes and challenges brought about by the impact of the globalization of markets and digitalization of the financial environment, we hope that all member companies will continue their passion and support to work hand-in-hand with the Association to develop diversified business opportunities for the industry.