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Do you think a Taiwan Index fund is a good long-term investment? Indexing is one of the most popular investment techniques among investors in plenty of developed markets. Lets try to make a prognosis, whether a Taiwan index fund is a good long-term investment. iShares MSCI Taiwan Index Fund is a non-diversified fund that makes investments in stocks that are mainly traded on the Taiwan Stock Exchange and uses a sampling strategy aimed to track its index. According to information from Business Week Online and other reliable financial sources like Yahoo Finance, and others, iShares MSCI Taiwan Index Fund seeks to provide investment results that correspond generally to the price and yield performance of publicly traded securities in the aggregate in the Taiwanese market, as measured by the MSCI Taiwan Index. Net assets at Feb. 10, 2006, amounted to $ 2, 009. 1 million (Business Week Online).
EWT Fund Details: Investment type: Equity Category: World Equity Total Net Assets: $ 2. 05 B as per 11 / 30 / 2006 Table 1 illustrates us the relative risk and return characteristics for EWT Fund. It is based on portfolio holdings. According to Reuters Lipper explanatory notes, eighty percent of classification is outlined using a thick colored line, where: Fund Count 21 Returns 19. 5 % to 27. 4 % Standard Deviation 14. 5 to 19. 1 Risk Percentile 85. 0 th to 97. 0 th Eighty percent of the asset type is marked as a shaded box, where: Fund Count 6, 836 Returns 5, 7 % to 21, 2 % Standard deviation - 7. 2 to 15. 8 Risk Percentile 10 th to 90 th The diamond represents us a mutual fund IShares MSCI Taiwan, where: Return 10. 6 % Standard Deviation 17. 9 Risk Percentile 95. 0 th According to Reuters Lipper classification, total return has a total score of 5, consistent return 4, preservation 5, tax efficiency 2 and expense 2. Lipper Leader scorecard key is marked as follows: highest lowest (from 2 to 5). Table 2 provides us with information concerning EWT performance by example of growth of $ 10, 000 over 6 years Although we know that stock markets and stock market indexes are things sensible and can decline significantly in result of economic, market, political or regulatory developments, the performance of the EWT fund is quite stable. The performance of EWT and the index also can vary somewhat due to factors such as transaction costs, sample selection, and timing differences associated with additions to and deletions from the Index (Fidelity Investments).
iShares MSCI Taiwan Index Fund, being a non-diversified fund, is able to invest a greater part of assets in securities of individual issuers, compared to a diversified fund. However, changes in financial market can cause greater changes and fluctuations in the price of share compared to a diversified fund. There is no assurance that an active trading market will be maintained (Fidelity investments). The iShares MSCI Taiwan Index Fund can trade at a discount to NAV. It is also important to remember that foreign investments are the subject to greater risk that American investments due to number of economic and political risks as well as risks of fluctuations in currency. This is the problem of all emerging markets.
At the same time, economists and analysts consider that investment in Taiwanese markets can be a good long-term investment. The reasons are quite easy to understand. Shaun Rein from the China Market research Group explains that Taiwanese economy is quite strong because many business companies are benefiting from Chinese boom. Taiwanese stock market also has benefited from strong position of the Taiwanese tech sector. According to the article Smart Investors Looking at Taiwanese Stocks, the market and Taiwanese companies are strong and long-term are good place to allocate a part of portfolio.
What are recommendations concerning what stocks to buy? Although it is very difficult to make concise prognoses, there are some stocks in Taiwan from the tech sector that could be worth considering, such as Taiwan Semiconductor (TSM) (the largest manufacturer of semiconductors in the world), its competitor Advanced Semiconductor Engineering (ASX), AU Optronics Corp (AUO), United Microelectronics Corp. (UMC), Chunghwa Telecom Co. Ltd (CHT), and others. What concerns investing in individual ADRs of Taiwanese stocks, it may not be viable for risk adverse investors during the political malaise that is consuming Taiwan. However, those investors who want to capitalize on potential of future business developments in between Taiwan and mainland as well as on Taiwanese growing economy should watch the political climate in Taiwan and invest in EWT because EWT fund has a lot of growth potential, according to opinions of analysts.
Bibliography iShares MSCI - Taiwan Index Fund. (2007, January 6). Retrieved January 6, 2007, from Fidelity Investments: web iShares MSCI Taiwan Index (EWT). (2007, January 6). Retrieved January 6, 2007, from web iShares MSCI Taiwan Index Fd. (2007, January 6). Retrieved January 6, 2007, from Business Week Online: web iShares MSCI Taiwan Index Fund. (2007, January 6). Retrieved January 6, 2007, from Bloomberg Web site: web ISHARES MSCI TAIWAN INDEX FUND. (2007, January 6). Retrieved January 6, 2007, from Trending Website: web Lipper Research Center. (2007, January 6).
Retrieved January 6, 2007, from web Smart Investors Looking at Taiwanese Stocks. (2006, November). Retrieved January 6, 2007, from web
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Research essay sample on Eighty Percent Standard Deviation
