Active ETFs Gain Popularity: Understanding Differences from Passive ETFs and Potential Risks
Following high-dividend and market-cap-weighted ETFs, active ETFs are emerging this year. They aim to break the limitations of passive ETFs by allowing fund managers to actively select and adjust holdings, offering more flexible operations and strategic diversity.
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- 📰 Published: April 29, 2026 at 15:11
- 🔍 Collected: April 29, 2026 at 15:31 (20 min after Published)
- 🤖 AI Analyzed: April 29, 2026 at 15:35 (3 min after Collected)
Following the boom of high-dividend ETFs and market-cap-weighted ETFs, active ETFs have surged this year. The formal name for active ETFs is actively managed exchange-traded funds, combining active management with the convenience of ETF trading. Fund managers actively select and adjust holdings, emphasizing flexible operations and strategic elasticity, hoping to break through the limitations of passive ETFs that merely track indices.
Active ETFs combine fund managers' active operations with the flexible trading of ETFs, bringing more diverse asset allocation to investors. However, while these products offer opportunities, they also come with certain risks.
Central News Agency
(Central News Agency website) Driven by the AI boom, Taiwan's concentrated market index has repeatedly hit new highs, with actively managed Taiwan stock ETFs being particularly popular. Many investors participate in Taiwan stock investments through active ETFs, entrusting professional managers to operate. What exactly are active ETFs? What precautions should be taken when buying active ETFs? The Central News Agency has compiled relevant information to help you understand.
Following the boom of high-dividend ETFs and market-cap-weighted ETFs, active ETFs have surged this year. The formal name for active ETFs is actively managed exchange-traded funds, combining active management with the convenience of ETF trading. Fund managers actively select and adjust holdings, emphasizing flexible operations and strategic elasticity, hoping to break through the limitations of passive ETFs that merely track indices.
Active ETFs are also listed on securities exchanges, and their trading methods are the same as passive ETFs, including general trading, odd-lot trading, regular fixed-amount investing, day trading, after-hours fixed-price trading, and margin trading. Therefore, they also enjoy high transparency and good liquidity. In addition, to facilitate investor identification and differentiation of product characteristics, active ETF product names will clearly indicate "Active." The naming rule is: Active, Issuer Name, Product.
Chen Yen-liang, Deputy Chairman of the Financial Supervisory Commission (FSC), humorously compared investing in passive ETFs in the past to choosing a standard bento box available in the market; in the future, with the opening of active and multi-asset ETFs, it will be like having a top chef buy ingredients for investors and prepare custom dishes.
After the FSC announced the opening of active ETFs at the end of 2024, Taiwan's first active ETF, Nomura Taiwan Optimal (00980A), was officially listed in early May 2025. In early April this year, the market value of Uni-President Investment Trust's 00981A surged past NT$100 billion, becoming Taiwan's first active ETF to break the NT$100 billion mark. As of the end of April, there are about 28 active ETFs listed in the Taiwan market.
The FSC originally stipulated that the holding ratio of a single company in domestic equity funds and active ETFs investing in Taiwan stocks could not exceed 10% of the net asset value. As of April 24, the FSC announced that if a listed company accounts for more than 10% of Taiwan's stock market capitalization, it would not be subject to the 10% investment limit, but the upper limit still cannot exceed 25% of the fund's net asset value.
Active ETFs combine fund managers' active operations with the flexible trading of ETFs, bringing more diverse asset allocation to investors. However, while these products offer opportunities, they also come with certain risks.
In a volatile market, active ETFs may have a better chance of generating excess returns, making them suitable for investors who actively seek excess returns and are willing to take higher risks; in a stable upward market, passive ETFs usually perform more steadily, making them suitable for investors who prefer stability and long-term diversified investments.
In addition, frequent trading of active ETFs may generate higher capital gains tax, and tax costs need to be considered before investing. At the same time, the returns of active ETFs depend on the fund manager's stock selection and operational capabilities. If judgment is erroneous, it may lead to underperformance compared to the market, and changes in managers may also affect the continuity of performance. (Edited by Hei Li-an) 1150429
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Active ETFs combine fund managers' active operations with the flexible trading of ETFs, bringing more diverse asset allocation to investors. However, while these products offer opportunities, they also come with certain risks.
Central News Agency
(Central News Agency website) Driven by the AI boom, Taiwan's concentrated market index has repeatedly hit new highs, with actively managed Taiwan stock ETFs being particularly popular. Many investors participate in Taiwan stock investments through active ETFs, entrusting professional managers to operate. What exactly are active ETFs? What precautions should be taken when buying active ETFs? The Central News Agency has compiled relevant information to help you understand.
Following the boom of high-dividend ETFs and market-cap-weighted ETFs, active ETFs have surged this year. The formal name for active ETFs is actively managed exchange-traded funds, combining active management with the convenience of ETF trading. Fund managers actively select and adjust holdings, emphasizing flexible operations and strategic elasticity, hoping to break through the limitations of passive ETFs that merely track indices.
Active ETFs are also listed on securities exchanges, and their trading methods are the same as passive ETFs, including general trading, odd-lot trading, regular fixed-amount investing, day trading, after-hours fixed-price trading, and margin trading. Therefore, they also enjoy high transparency and good liquidity. In addition, to facilitate investor identification and differentiation of product characteristics, active ETF product names will clearly indicate "Active." The naming rule is: Active, Issuer Name, Product.
Chen Yen-liang, Deputy Chairman of the Financial Supervisory Commission (FSC), humorously compared investing in passive ETFs in the past to choosing a standard bento box available in the market; in the future, with the opening of active and multi-asset ETFs, it will be like having a top chef buy ingredients for investors and prepare custom dishes.
After the FSC announced the opening of active ETFs at the end of 2024, Taiwan's first active ETF, Nomura Taiwan Optimal (00980A), was officially listed in early May 2025. In early April this year, the market value of Uni-President Investment Trust's 00981A surged past NT$100 billion, becoming Taiwan's first active ETF to break the NT$100 billion mark. As of the end of April, there are about 28 active ETFs listed in the Taiwan market.
The FSC originally stipulated that the holding ratio of a single company in domestic equity funds and active ETFs investing in Taiwan stocks could not exceed 10% of the net asset value. As of April 24, the FSC announced that if a listed company accounts for more than 10% of Taiwan's stock market capitalization, it would not be subject to the 10% investment limit, but the upper limit still cannot exceed 25% of the fund's net asset value.
Active ETFs combine fund managers' active operations with the flexible trading of ETFs, bringing more diverse asset allocation to investors. However, while these products offer opportunities, they also come with certain risks.
In a volatile market, active ETFs may have a better chance of generating excess returns, making them suitable for investors who actively seek excess returns and are willing to take higher risks; in a stable upward market, passive ETFs usually perform more steadily, making them suitable for investors who prefer stability and long-term diversified investments.
In addition, frequent trading of active ETFs may generate higher capital gains tax, and tax costs need to be considered before investing. At the same time, the returns of active ETFs depend on the fund manager's stock selection and operational capabilities. If judgment is erroneous, it may lead to underperformance compared to the market, and changes in managers may also affect the continuity of performance. (Edited by Hei Li-an) 1150429
Stand with the facts, every sponsorship from you is the power to protect press freedom.
Download the Central News Agency "First-hand News" APP to stay updated with the latest news.
The text, images, and audio/video on this website may not be reproduced, broadcast, transmitted, or used without authorization.