Franklin FTSE Taiwan ETF: A Dividend Catalyst in a Tech Powerhouse

The Franklin FTSE Taiwan ETF (FLTW) is poised to deliver its semi-annual dividend on June 27, 2025, offering investors a timely opportunity to capitalize on Taiwan's tech dominance. With a focus on the island's semiconductor giants and a low expense ratio, FLTW balances income and growth—a rare combination in today's volatile markets. Let's dissect its appeal, risks, and why now might be the right time to buy.

The Dividend: A Modest Reward, But Is It Sustainable?

FLTW's dividend yield has dipped to 1.52% as of June 2025, down from 2.79% earlier in the year. The June 27 payout of $0.07 per share reflects a strategic adjustment to align with recent earnings trends. While this may disappoint income-focused investors, the reduction isn't a red flag. Taiwan's tech sector faces headwinds, including global supply chain disruptions and cooling demand for semiconductors in legacy industries. However, long-term growth drivers like AI, 5G, and electric vehicles remain intact.

Why It Matters: FLTW's expense ratio of 0.19%—a fraction of the 0.59% charged by the iShares MSCI Taiwan ETF (EWT)—ensures more of your capital stays invested. Even with a trimmed dividend, FLTW's cost efficiency outshines rivals, making it a better bet for buy-and-hold investors.

The Sector Play: Taiwan's Silicon Heart

FLTW's 61.17% allocation to the Electronic Technology sector is its crown jewel. The top holding, Taiwan Semiconductor Manufacturing Co. (TSMC), accounts for 21.29% of the ETF, with other semiconductor darlings like MediaTek (5.54%) and Hon Hai (6.69%) rounding out the top five. This concentration isn't a bug—it's a feature.

Taiwan is the global epicenter of semiconductor manufacturing, producing 92% of the world's advanced chips. As AI adoption accelerates and the U.S.-China tech war intensifies, Taiwan's tech titans are indispensable. Even geopolitical risks, like cross-strait tensions, haven't dented investor confidence—FLTW's YTD return of 12.7% as of June 2025 outperforms its category average.

The Bottom Line: FLTW isn't just an ETF—it's a direct play on the companies shaping the next tech revolution.

Tracking Efficiency: A Close Runner-Up to Its Benchmark

FLTW's tracking difference—a measure of how closely it mirrors its FTSE Taiwan RIC Capped Index—has a median of -1.24%, meaning it underperforms the benchmark by an average of 1.24%. While this may seem concerning, the ETF still delivers. Its 1-year return of 27.5% beats the ETF Database Category Average of 9.05%, and its expense advantage offsets minor tracking gaps.

The key takeaway? FLTW isn't perfect, but its cost structure and sector focus make it a compelling choice for investors willing to tolerate minor tracking deviations for exposure to Taiwan's tech giants.

Investment Thesis: Income + Growth = Winning Combo

For long-term investors, FLTW offers a rare blend of yield (even at 1.52%, it's still better than many bonds) and growth via Taiwan's tech dominance. Here's how to play it:

1. Buy the Dip: Use the June 27 dividend as an entry point. Post-ex-dividend dates, shares often rebound as income seekers reinvest.
2. Dollar-Cost Average: Given FLTW's sector concentration, spread your buys over the next few months to mitigate volatility.
3. Pair with Diversifiers: Combine FLTW with broader Asia-Pacific ETFs like the iShares MSCI Asia ex-Japan ETF (AAXJ) to balance risk.

Risks to Consider

• Concentration Risk: FLTW's top 10 holdings make up nearly 48% of the portfolio. A misstep by TSMC or a tech downturn could hit hard.
• Global Demand: Semiconductors are cyclical. A prolonged slowdown in AI adoption or EV sales could dent returns.
• Geopolitical Tensions: Cross-strait relations and U.S.-China trade policies remain wildcards.

Final Take

FLTW isn't for the faint-hearted, but for investors willing to stomach volatility, it's a once-in-a-decade opportunity to own Taiwan's tech crown jewels at a fraction of the cost. The June 27 dividend is a buying catalyst—act now, but keep an eye on sector trends.

Recommendation: Buy FLTW for a 3–5 year horizon, using dips below $45 as entry points. Pair with diversification and a watchful eye on global tech cycles. This ETF isn't just about dividends—it's about owning the future of semiconductors.