Fubon Financial

Listing of "Fubon TWSE Corporate Governance 100 ETF" - Taiwan's First Corporate Governance ETF

2017.05.17

Fubon Financial Holdings made progress again in terms of environmental, social and governance (ESG) practices! In support of the government's corporate governance initiatives, Fubon Asset Management (a member of Fubon Financial Holdings) raised Taiwan's first corporate governance ETF named "Fubon TWSE Corporate Governance 100 ETF" (alias: Fubon CG; TWSE ID: 00692). The ETF was listed today (the 17th) with an initial size of nearly NT$3.3 billion, which is evident of how highly investors value Taiwan's corporate governance role models, and represents a new milestone in Fubon's support for sustainable business development!

The Taiwan Stock Exchange Corporation (TWSE) and Fubon Financial Holdings held a joint press conference today for the listing of the new ETF. TWSE President Chi-Hsien Lee and Fubon Financial Holdings President Vivien Hsu were present at the press conference; Vice Chairman Cheng-Mount Cheng of the Financial Supervisory Commission gave a congratulatory speech during the event, while Section Chief Li-Ling Chen from Securities and Futures Bureau, President Hsin-Chang Chen from Taiwan Index Plus Corporation and many other guests were also present to bear witness to the making of history. The press conference also saw the presence of senior executives from subsidiaries of Fubon Financial Group, including Taipei Fubon Bank Chairman Eric Chen, Fubon Life President Benson Chen, Fubon Securities President Leo Cheng, Fubon Asset Management Chairman Philip Hu, Fubon Securities Investment Services Chairman Henry Lin, Fubon Asset Management President Ming M.C. Lee and Fubon Futures President Phoebe Chang.

Fubon Financial Holdings President Vivien Hsu commented that the Company has long been committed to implementing best corporate governance practices. In addition to being ranked among the top 5% in TWSE's corporate governance evaluation for three consecutive years and selected as a composition of "TWSE Corporate Governance 100 Index," Fubon was chosen as one of the compositions of DJSI - Emerging Markets in the last year for the first time, making it the only Taiwanese financial holding company to be chosen in the "FBN Diversified Financial Services and Capital Markets" category! "Fubon TWSE Corporate Governance 100 ETF" invests mainly in compositions of the "TWSE Corporate Governance 100 Index." By supporting companies that exhibit sound corporate governance, Fubon hopes to inspire a positive cycle in Taiwan's capital market and contribute to the development of the local ETF market.

Vivien Hsu further pointed out that trade activities in the local ETF market have increased to account for as high as 10% of total trade volume in TWSE, which shows that an increasing number of investors are accepting ETFs as one of the key components to their asset allocation. There are currently more than 80 listed ETFs in Taiwan; Fubon Asset Management accounts for 24 of the listed ETFs and manages over NT$67 billion in assets, which makes it the leader of the ETF market. Fubon Asset Management will continue introducing broader variety of ETF products onto the market, and strive to establish its reputation as an "all-round investment expert."

According to Fubon Asset Management Chairman Philip Hu, "Fubon TWSE Corporate Governance 100 ETF" will be tracking the underlying index using a combination of qualitative and quantitative analysis, and the ETF will aim to capture long-term growth and long-term stability of corporate governance role models in Taiwan. There are three main advantages to investing in corporate governance: 1. Growth and competitiveness, 2. Sustainability, and 3. Good overall returns and yields. In terms of performance, compositions of TWSE Corporate Governance 100 Index delivered a net profit margin of 17.15% in 2015 after taking revenue growth factors into consideration, which was better than the 15.99% achieved by compositions of TAIEX. This shows that companies with more robust corporate governance are more capable of generating profits for shareholders and more competitive in terms of products or services provided.

In addition, compositions of TWSE Corporate Governance 100 Index averaged 18.30% in directors'/supervisors' shareholding. A higher percentage of directors'/supervisors' shareholding suggests that the management has greater confidence and control over a company's prospects. Only 6.47% of directors'/supervisors' shareholding were pledged in 2016, as compared to the 6.96% average across TAIEX, which indicated that directors/supervisors were more confident about their organizations than the market in general. Compositions of TWSE Corporate Governance 100 Index averaged 46.42% in terms of foreign ownership in 2016, which was higher than the TAIEX average of 39.92%. This shows that foreign investors are relatively optimistic about the prospects of companies with sound corporate governance. Judging by total annual returns, TWSE Corporate Governance 100 Index consistently ranks ahead among the main indices in Taiwan.