Looking back at the past year, in the international scene, a trade war broke out between China and the United States that continued till the end of the year towards an eventual truce. In addition, major international events such as the US interest rate hike, the delay in Brexit, severe turbulent international oil market, and the bitcoin crash are making an impact on the global financial market. Domestically, events with significant impact include the retirement of both Governor Fai-Nan Perng from the Central Bank and Chairman Morris Chang from the Taiwan Semiconductor Manufacturing Company (TSMC), the pension fund reform, the disputes regarding one fixed day off and one flexible rest day, the ninein-one election, the referendum, and other major economic and political factors affected the market. Overall, 2018 was a year full of changes and risks.
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 | | Chairman：Jeff Chang |
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Fortunately, in spite of the stern market environment, we have achieved many milestones in the promotion of the industry, including opening up for the use of electronic payment accounts for the subscription and redemption of onshore money market fund issued by SITEs, ETF linked funds raised and managed by SITEs, and strive to open up and allow SITEs to transfer its own funds to invest in SICE. In terms of the SICE industry, in correspondence with the automated investment consulting services, and open up and allow SICEs to provide FinTech consulting and related consulting services. We hope to enhance the growth momentum of the industry by opening up diversified investment channels and business items.
In terms of the scale of asset under management (AUM), the size of the onshore funds increased from NTD2.3185 trillion at the end of 2017 to NTD2.5719 trillion, with a growth rate of 10.93%. The total AUM of the discretionary investment has grown from NTD1.7499 trillion to NTD1.8662 trillion. Overall, total AUM of SITE and SICE together have grown from NTD4.1070 trillion to NTD4.4787, an annual growth rate of 9.05%. As for offshore funds, its total AUM has declined slightly, the amount held by domestic investors decreased from NTD3.4956 trillion at the end of last year to NTD3.1853 trillion, a decrease of 8.88%. Cumulative AUM of onshore, offshore, private placement funds, as well as discretionary investment business amounted to NTD7.6640 trillion, which is roughly equivalent to the size at the end of 2017.
In welcoming 2019, the Association will continue to strive to promote pension fund and retirement planning and expand marketspace for business development including:
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Promote Voluntary Contribution and Member-Choice Investment Mechanism for Labor Pensions and Assist the “National Member Choice Pension Experiment”
The labor pension voluntary contribution and member-choice investment mechanism provides a platform for labors to choose their own investment products through voluntary contribution under the current labor pension system. This mechanism will not affect the rights of the labors in the current system, and the portion contributed by the employer will still retain government’s guaranteed profits. Furthermore, the voluntary contribution labor pension from the employee can be used to invest in the pre-selected, high-quality retirement products with tax benefits, which will not only can increase the incentives for labor to contribute voluntarily but also enable labors to make better use of diversified financial products to prepare their retirement savings, achieve risk diversification, improve investment performance, tax benefits, and tax deduction benefits. At the same time, the system can also help the government to resolve the heavy burden faced by the current pension system.
Since the labor must bear the profits and losses of the member-choice mechanism, it has raised doubts among the general public. Therefore, under the guidance of the FSC, the Association, Taiwan Depository and Clearing Corporation (TDCC), and the Securities and Future Corporation (SFI) entrusted FundRich Securities Co. Ltd to implement the “National Member Choice Pension Experiment”. The experiment hopes to promote the correct mindset of long-term regular saving plan and the benefits of early retirement financial management with a small experiment of 10,000 people for a period of 2 years.
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Continue to Promote Discretionary Robo-Advisor Services
Since the opening of the robo-advisor services, SITEs, SICEs and banks successively launched related services, but the current robo-advisor services, using an automated tool to provide investment consulting services to investors, is still subject to customer consent before executing an investment transaction. In the future, the Association will further deliberate the provision for discretionary investment with automated tools, according to the agreed investment strategy and risk scope. The robo-advisor will perform asset allocation and rebalancing operation for customers, and provide general investment at a lower cost, so that general investors can obtain quality investment advice and management services.
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Deliberation of the Risk Level Calculation Method for Fund Portfolio and Related Suitability Adjustment Specifications
With the increasing awareness of investors on diversifying risks and diversified layout, the financial needs of investors have been transformed from a single financial product to portfolio services. The Association is currently deliberating on the risk level calculation method for fund portfolio and recommends the revision of fund sales suitability specification to match the investment portfolio sales model.
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Participation in the Asia Region Funds Passport (ARFP)
To help the industry to further internationalize and enhance its competitiveness, through the participation of the Asia Region Funds Passport (ARFP) promoted by Australia, SITE funds can be sold to the participating countries of the ARFP mechanism, as long as they meet the common fund review criteria, which will help to develop the international sales market for the SITE funds.
In the new year, we hope that with the joint effort of all the industry and the Association, in addition to continuing to promote the above-mentioned key development projects, we can also create new business opportunities to expand the scale of asset management, enhance presence in Asia, and align with the international market. The Association will continue to strive to improve the industry environment and conceive development strategies to create a sustainable and competitive industry.
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