ETFs attractive amid hopes of AI boom
Taiwan ETFs growth heavily outpaces broader market
Taiwan regulators keep close eye on ETF craze
Chip demand shifts, geopolitical risks could rock funds

TAIPEI, May 3 Reuters Money is pouring into Taiwan exchangetraded funds as investors scramble for exposure to the artificial intelligence supply chain, raising analyst and regulator caution just as a rally in the sector has turned fickle and volatile.

The rush into exchangetraded funds ETFs has changed the ownership structure of a 2 trillion dollar market that sits at a geopolitical flashpoint.

Regulators and ETF managers fear less sophisticated investors tapping into the AI fever could end up in pain if markets sour or tensions flare with China, which views democratically governed Taiwan as its own territory.

As of March, Taiwan39;s ETF sector was valued at T4.74 trillion 145.8 billion, according to data from the island39;s Financial Supervisory Commission FSC.

That is up 77 from a year earlier, against a rise of 20 in the value of the benchmark equity index over the same period, pointing to heavy inflows.

The speed of the investment, and the borrowed money that much of it rests on, has helped drive the market higher. Money managers say it also raises the risk of an outsized reversal.

Our clients have concerns. Taiwan stocks have risen above 20,000 points. How much higher can they go? said Peter Yang, manager of an ETF launched by FuhHwa Securities Investment Trust.

The…