Potential of tech shares makes North Asia viable investment choice
Technology shares are playing an important role in driving the economy, as they have beenable to escape the economic slowdown compared to other groups.
The rise in the value of technology shares boosted indices in the US and North Asian markets, such as South Korea, Taiwan and China to rebound higher than the before the Covid-19 outbreak, although the pandemic has not been resolved yet.
One of the mutual funds which invests in North Asian countries is Tisco North Asia Equity Fund (TISCONA) that has a policy to invest in foreign Exchange Traded Funds (ETFs) to generate returns higher than the returns of indices in four North Asian markets, namely South Korea, Taiwan, China and Hong Kong.
TISCONA fund was established in early 2014. The average return in the past five years was 8.92 per cent, higher than the return of four indices in North Asian markets of 5.24 per cent.
The fund had a loss in 2015 and 2018 of 6.65 per cent and 18.18 per cent respectively and had profit in 2016, 2017 and 2019 of 5.76 per cent, 36.70 per cent and 17.70 per cent respectively. The return since the beginning of this year was 3.80 per cent.
The highest loss in the past five years was 34.54 per cent, while the fund's standard deviation was 18.12 per cent per year.
According to data on June 30 this year, TISCONA fund invested 24.92 per cent in Xtrackers MSCI Taiwan UCITS ETF, 24.86 per cent in Tracker Fund of Hong Kong, 24.82 per cent in iShares Core MSCI China Index ETF and 24.81 per cent in Xtrackers MSCI Korea Index UCITS ETF.
In Taiwan ETF, the fund invested 63.92 per cent in technology shares and 16.35 per cent in finance shares, of which 33.95 per cent of the total shareholding was TWN Semicont Man, followed by 5.14 per cent in HON HAI Precision Industry.
In the Hong Kong ETF, the fund invested 49.68 per cent in finance shares and 11.27 per cent in technology shares, of which 11.27 per cent was Tencent Holdings, followed by 10.31 per cent in AIA Group.
In the China ETF, the fund invested 27.16 per cent in luxury goods shares and 22.22 per cent in telecommunication shares, of which 16.95 per cent of total shareholding was Alibaba Group Holding, followed by 15.42 per cent in Tencent Holdings.
In South Korean ETF, the fund invested 45.73 per cent in technology shares and 9 per cent in telecommunication shares, of which 29.75 per cent was in Samsung Electronics, followed by 5.76 per cent in SK Hynix.
TISCONA fund's outstanding point is the fund diversified risks in North Asian countries, but the fees charged by the fund are higher than similar funds. The fund currently charges 1.6 per cent.
North Asian stock markets are likely to grow further compared to other Asian regions because of the high proportion of technology shares.
