Taipei, 23 April 2026 – Taiwan is planning to ease restrictions on how much active fund managers can invest in Taiwan Semiconductor Manufacturing Co., in a move aimed at enhancing portfolio flexibility and aligning regulations with the growing dominance of the chipmaker in local markets.
The policy shift reflects the outsized influence of TSMC, which has become a cornerstone of Taiwan’s equity market amid surging global demand for artificial intelligence chips.
Relaxing Concentration Limits for Active Funds
Under current rules, actively managed funds face limits on how much they can allocate to a single stock.
Regulators are now considering loosening these caps, allowing fund managers greater exposure to TSMC, whose weight in benchmarks has increased significantly due to strong performance and market capitalisation growth.
The change is intended to better reflect market realities, where TSMC plays a central role in driving index returns and investor interest.
TSMC’s Dominance Reshaping Investment Landscape
TSMC’s rapid growth, fueled by global demand for advanced semiconductors, has elevated its position in Taiwan’s financial markets.
The company’s shares have surged alongside the broader tech rally, driven by artificial intelligence demand and capital spending by major global technology firms.
This dominance has created challenges for fund managers, who risk underperformance if they are unable to allocate sufficiently to the stock.
Balancing Risk Concentration and Market Reality
While easing limits offers greater flexibility, regulators remain mindful of concentration risks.
Allowing higher exposure to a single company could increase vulnerability to stock-specific volatility, particularly in a market where TSMC already accounts for a large share of total market value.
The policy adjustment is therefore expected to strike a balance between enabling competitive fund performance and maintaining prudent risk management.
Supporting Growth of Taiwan’s Asset Management Industry
The move also aligns with broader efforts to support Taiwan’s growing fund industry.
Assets under management are projected to rise significantly in the coming years, driven by strong investor interest in technology and ETF products linked to companies like TSMC.
Providing fund managers with greater flexibility is seen as essential to maintaining competitiveness and attracting both domestic and international capital.
The Ledger Asia Insights
Taiwan’s regulatory shift highlights a broader trend in capital markets, where dominant technology companies are reshaping investment frameworks.
For Asian investors, three key implications emerge:
1. Market Concentration Driving Policy Changes
Regulators are adapting rules to reflect the growing influence of mega cap technology firms.
2. Active Fund Strategies Evolve
Greater flexibility allows fund managers to align portfolios more closely with benchmark heavyweights.
3. Semiconductor Sector Remains Core Investment Theme
TSMC’s central role underscores the continued importance of semiconductors in global market performance.
Taiwan’s move signals a structural evolution in portfolio management, where regulatory frameworks are being recalibrated to accommodate the realities of a tech driven market dominated by a few key players.
