00981A has sparked controversy due to its purchase of ETFs such as 0050 and 0052. Trader Giant Jie criticized this move as exploiting two layers of management, questioning whether the manager is providing passive performance through active fees. DeFi commentator Yu Zhe'an and researcher Freddy countered that allocating to ETFs can reduce slippage costs and bypass the 10% regulatory limit on single holdings. In a market where TSMC has a significant weighting, it is a pragmatic strategy to track beta and optimize liquidity.
Vincent, co-founder of the Man Report and former managing director of JP Morgan Asset Management, also stated that shareholding limits are a pain point for many funds. In his previous experience, his team often tried to find ways to ensure that the fund's performance could keep up with TSMC's trend. They knew they should buy more TSMC shares, but due to shareholding limits, they had to painfully reduce their holdings.
Renowned trader Giant Jie: 00981A - Exploiting Investors' Skins
Renowned trader Giant Jie recently criticized the Uni-President Active ETF (00981A) on social media, calling it the first nested ETF in the Taiwan stock market, sparking heated discussions in the market. He pointed out that while 00981A charges higher fees under the guise of active management, it also significantly buys passive ETFs such as Yuanta Taiwan 50 (0050) and Fubon Technology (0052), questioning whether its true nature is active or passive.
Giant Interactive used the analogy of "hiring a Michelin-starred chef but serving McDonald's" to satirize investors who pay active management fees but receive passive index exposure in return. He further stated that this move is tantamount to bypassing the single shareholding limit and indirectly holding TSMC. In addition to the strategic logic, he also criticized this structure for creating a "fee within a fee" exploitative charging model, and jokingly said that if 00981A continues to expand its ETF holdings, it may become the "king of ETF nesting dolls".
00981A yields 61.6%, analyst Yu Zhe'an: Assessing transaction costs is not a lazy approach.
Regarding the aforementioned controversy, researcher Yu Zhe'an offered a more pragmatic analysis. He pointed out that actively managed funds allocating to other ETFs can, in practice, achieve multiple benefits, including guaranteeing a lower beta, improving liquidity, reducing the impact of subscriptions and redemptions, quickly establishing sector exposure, and optimizing beneficiary interests under regulatory constraints.
Yu Zhe'an further calculated using data, pointing out that even with double management fees, the additional annualized cost is only about 0.0031%. Compared to the potentially high slippage of over 0.5% for small and medium-sized individual stocks, the overall cost of ETF allocation is significantly lower under a single subscription/redemption impact scenario. He believes that if evaluated comprehensively from the perspectives of actual transaction costs, securities transaction taxes, and market liquidity, this move by managers is not necessarily laziness, but rather a choice that prioritizes the overall interests of investors.
Vincent, co-founder of the Man Report and former managing director of JP Morgan Asset Management, also stated that shareholding limits are a pain point for many funds. In his previous experience, his team often tried to find ways to ensure that the fund's performance could keep up with TSMC's trend. They knew they should buy more TSMC shares, but due to shareholding limits, they had to painfully reduce their holdings.
Researcher Freddy: Holding more than 10% of a single shareholding is a reasonable practice.
Researcher Freddy believes that operating actively managed ETFs like a "fund of funds" is not inherently wrong; the key lies in whether the investment objectives align with the expectations of the beneficiaries. He points out that in an environment with a 10% cap on single-shareholding and increased market volatility, using ETFs to quickly adjust overall beta, reduce cash drag, or maintain full investment during periods of significant capital inflows are all reasonable operational considerations for managers.
Furthermore, ETFs can effectively reduce the price impact on core holdings when facing large redemptions. Freddy stated bluntly that if investors are only pursuing leveraged beta or style factors, they don't actually need to choose actively managed ETFs; however, if the goal is risk-adjusted alpha, then market timing judgment itself can also be a source of value. He concluded that many pension funds and sovereign wealth funds already adopt similar structures, and criticizing funds of funds superficially often ignores the actual division of labor and limitations in institutional investment operations.
This article, "00981A Earns 61% Annually but Gets Criticized? Giant Analyst Criticizes ETFs as a Double-Layered Doll! Experts Have Different Opinions," first appeared on ABMedia .
