CTBC Investments’ actively managed ETF, CTBC Taiwan Income (00406A), closed at NT$8.60 on Oct. 30, below its NT$10 issue price, according to data from the Taiwan Stock Exchange and a report by Commercial Times.
Even with the price below the offering level, the fund traded 1.292 billion units that day, equal to about 1.292 million board lots, with turnover reaching NT$11.07 billion. Depository data showed 455,610 beneficiaries as of Oct. 30.
Ex-dividend date set for Nov. 3
The exchange’s ex-rights and ex-dividend schedule shows that 00406A will go ex-dividend on Nov. 3, with a cash distribution of NT$0.138 per unit. Nov. 2 was the last day to buy the ETF to qualify for this payout.
Business Today said the record date is Nov. 9 and the payment date is Nov. 27. An investor holding one board lot, or 1,000 units, would receive NT$138 before tax and fees.
As of 11:10 a.m. Taipei time on Nov. 2, real-time exchange quotes showed an intraday low of NT$8.41, with trading volume at about 632,000 lots. On the ex-dividend date, the reference price will be adjusted downward by NT$0.138.
Heavy trading clustered on down days in October
Exchange data showed five trading days in October with volume above 1 billion units: Oct. 13, 15, 22, 27 and 30. All five sessions closed lower.
The largest single-day volume came on Oct. 15, when 17.73 billion units changed hands. The ETF closed at NT$9.30 that day, down NT$0.61, or 6.16%. On Oct. 30, it fell NT$0.35, or 3.91%, with the second-largest volume of the month.
00406A had closed at NT$10.33 on Oct. 6, its highest closing price of the month. By Oct. 30, the price had fallen about 16.7% from that level, based on the figures cited in the report.
The ETF had also traded below its issue price in July. It closed at NT$8.03 on July 29 and did not move back above the issue price until Oct. 2, when it closed at NT$10.13.
How the 19.26% annualized yield was calculated
Commercial Times used the Oct. 30 closing price of NT$8.6 to estimate a single-period distribution yield of about 1.60%. Multiplying the NT$0.138 payout by 12 produced an annualized dividend yield of about 19.26%.
The report said that calculation depends on two assumptions: that the ETF continues to distribute NT$0.138 every month and that the share price stays at NT$8.6. Neither condition is guaranteed. Business Today, using the same closing price, arrived at about 19.5%, with a slight difference in methodology.
Commercial Times also noted that part of the higher annualized yield reflects the decline in the share price. For investors who bought earlier, whether dividends can offset capital losses remains a separate question.
Third straight NT$0.138 distribution
Exchange ex-dividend records show that since listing, 00406A has gone ex-dividend three times before this round: July 31, Sept. 2 and Oct. 5, with distributions of NT$0.128, NT$0.138 and NT$0.138 per unit, respectively. This latest round marks the third consecutive NT$0.138 payout.
The ETF was listed on the exchange on June 11. Business Today reported that the fund’s assets grew from NT$6.5 billion at listing to NT$126.53 billion as of Oct. 29. Depository data showed 13.588 billion units in custody on Oct. 30.
Distribution sources include option premium
According to the report, 00406A focuses on active stock selection and also uses a covered call strategy, meaning it holds stocks while selling index call options to collect premium income.
Business Today cited the personal finance page "棒棒的理财失控周记" as saying the fund’s distribution sources include stock dividends, capital gains from active management and option premium. The same source said the notional principal ratio for written calls ranges from 0% to 25%.
The report added that this strategy trades away part of the upside in exchange for cash flow. In a strong rally, gains are capped, while in a downturn, premium income can offset only part of the losses.
Fund manager Chang Shu-ting said collecting option premium during periods of high-level market consolidation helps strengthen downside protection.
Top holdings and trading comparison
Business Today reported that the ETF’s top 10 holdings include Taiwan Semiconductor Manufacturing Co., Tripod Technology, Unimicron and MediaTek, with a low weighting in financials and traditional industries. It also holds long positions in Taiwan stock index futures.
Citing CMoney data, the report said that from the start of October through Oct. 29, 00406A averaged 639,000 lots in daily trading volume, the highest among ETFs. Another actively managed ETF, Uni-President Taiwan Upgrade 50 (00403A), had assets of NT$128.46 billion and average daily volume of 187,000 lots.
Chang said post-ex-dividend price performance, distribution sources and total return including dividends are key indicators for evaluating the fund.
Key dates for the latest distribution
- Cash distribution per unit: NT$0.138
- Last buy date: Nov. 2
- Ex-dividend date: Nov. 3
- Record date: Nov. 9
- Payment date: Nov. 27
- Pre-tax amount for one board lot: NT$138
What the 19% figure does and does not mean
Using the method cited by Commercial Times, the annualized yield of about 19.26% comes from a one-time yield of roughly 1.60% based on the Oct. 30 closing price, then multiplying that payout by 12. The report explicitly said this does not represent actual realized return, and a falling share price can mechanically push the annualized figure higher.
