Key Highlights

● FLTW traded down 1.28% at $103.49 in Friday's October 16 intraday session.

● The fund charges a 0.19% net expense ratio, versus 0.59% for EWT.

● FLTW holds about 110 to 120 Taiwan Stock Exchange-listed common stocks.

● TSMC is typically weighted at the 20% cap in FLTW.

The Franklin FTSE Taiwan ETF (NYSE American:FLTW) fell 1.28% to $103.49 in intraday trading on Friday, October 16. FLTW charges an expense ratio of just 0.19% per annum and offers pure-play foundry exposure to Taiwan.

The island of Taiwan occupies an irreplaceable, central position in the global technological infrastructure, producing over 60% of the world's total semiconductor supply and more than 90% of the most advanced sub-5-nanometer microchips. For international investors seeking direct exposure to this critical manufacturing ecosystem, the fund provides heavy, targeted weighting to contract manufacturing titan Taiwan Semiconductor Manufacturing Co. (NYSE:TSM), known as TSMC, alongside leading chip design and packaging firms at a fraction of the cost of legacy benchmark peers.

FLTW opened at $104.40 and moved between $103.15 and $104.40 in intraday trading on Friday, October 16, against a previous close of $104.83. Its 52-week trading range runs from $56.57 to $114.29.

Legal Architecture & Capped Index Methodology

FLTW is registered under the Investment Company Act of 1940 as an open-end management investment company, operating as a distinct investment series of the Franklin Templeton ETF Trust. Franklin Templeton (NYSE:BEN) serves as the registered investment advisor, overseeing portfolio replication, local currency settlements, and corporate governance actions. The fund launched on November 2, 2017.

The fund tracks the FTSE Taiwan RIC Capped Index. This market-capitalization-weighted benchmark is tailored specifically to satisfy the Regulated Investment Company (RIC) diversification requirements of the US Internal Revenue Code. Under these rules, no single issuer may exceed 20% of the total index weight at quarterly rebalance, and all holdings exceeding 4.5% cannot collectively surpass 48% of the fund’s aggregate value, preventing extreme single-holding dominance while preserving authentic market exposure.

Portfolio Composition: Heavy TSMC & Hardware Supply Chains

FLTW holds approximately 110 to 120 common stocks listed on the Taiwan Stock Exchange (TWSE). However, reflecting the structure of the Taiwanese economy, the portfolio is intensely concentrated in the information technology sector, which accounts for over 60% of total fund assets, followed by financials, materials, and industrials.

Its cornerstone holding is TSMC, typically weighted at the 20% regulatory cap, and the top 10 holdings together account for about 50% of assets. The remaining portfolio features foundational electronics powerhouses, including fabless design titan MediaTek, global server and electronics assembler Hon Hai Precision Industry (Foxconn), specialized test and packaging leader ASE Technology Holding (NYSE:ASX), and delta electronics power suppliers. This design ensures that FLTW captures the entire electronics manufacturing pipeline.

The 0.19% Fee Advantage & Cost Efficiency

A primary advantage of FLTW is its 0.19% net expense ratio. Compared to legacy Taiwan ETFs like EWT, which charges 0.59%,, FLTW delivers a 40-basis-point annual fee discount. For institutional allocators and retail investors holding significant emerging market positions, this cost difference represents substantial compounding alpha over multi-year periods.

Franklin Templeton achieves this fee efficiency through disciplined quantitative indexing, direct local custody relationships in Taipei, and efficient electronic execution across overlapping international trading hours, minimizing execution drag relative to net asset value.

Performance Dissection: AI Computing & Foundry Demand

Over the past year, FLTW's returns have been driven by relentless global demand for advanced artificial intelligence computing accelerators, high-end smartphones, and autonomous vehicle electronics.

Because virtually every leading fabless chip designer in North America, including NVIDIA (NASDAQ:NVDA), AMD (NASDAQ:AMD), Apple (NASDAQ:AAPL), and Qualcomm (NASDAQ:QCOM), contracts TSMC for advanced node fabrication, FLTW’s constituents captured unprecedented manufacturing backlogs and record gross margins. Furthermore, Taiwanese server manufacturers experienced massive revenue growth assembling AI server racks for global hyperscale data centers.

Market commentary on October 16 described the AI-led chip selloff that hammered Taiwan's market as continuing to weigh on the fund's tech-heavy holdings. The Taiex lost over 1,600 points on October 15 on fears of a Fed rate hike after hot US inflation data, with ASE falling 10%, MediaTek 6.9% and Delta Electronics 8.7%. Worries about AI debt financing added pressure, and TSMC slipped despite record third-quarter profit and fourth-quarter revenue guidance of roughly 58% year-over-year growth.

The commentary added that Taiwan's market tried to rebound on October 16, while reports that Taiwan may tighten AI chip export controls to China, and a short-interest rise of roughly 201% in the ETF in late September, added to a cautious tone. The Fed meets October 27-28.

Distribution Profile, Dividend Yield & Taxation

FLTW distributes dividend income semi-annually, supported by the strong free cash flows and disciplined dividend policies of Taiwanese corporations. The fund carried a 30-day SEC yield of approximately 1.65% as of October 2026.

From a taxation standpoint, FLTW provides standard Form 1099-DIV reporting. Dividends generally qualify as qualified dividend income (QDI) for US taxable accounts. The fund’s regulated investment company (RIC) status ensures efficient tax pass-through, and shareholders can claim foreign tax credits to offset Taiwanese dividend withholding taxes on their US tax returns.

Secondary Market Liquidity & Lead Market Making

Trading under the ticker FLTW, the fund maintains active secondary market liquidity supported by lead market makers and authorized participants. Bid-ask spreads typically hover between three and five cents per share during standard US trading hours.

Because the Taiwan Stock Exchange operates during Asian market hours, market makers in New York actively calibrate FLTW’s intraday pricing against TSMC American Depositary Receipts (ADRs), Taiwan index futures, and real-time New Taiwan Dollar (TWD/USD) foreign exchange rates, ensuring secondary quotes track fair value.

Primary Investment Risks: Geopolitical & Foundry Concentration

FLTW carries distinct risk factors. Paramount among these is geopolitical risk: Taiwan faces continuous cross-strait military and political tensions with mainland China, creating tail-risk vulnerability for physical manufacturing facilities.

Additionally, the fund carries acute concentration risk in TSMC and the broader semiconductor hardware sector. Any disruption in global consumer electronics demand, water shortages in science parks, or regional electrical power constraints could significantly impair portfolio returns. Furthermore, currency fluctuations between the New Taiwan Dollar and the US Dollar directly impact dollar-denominated returns.

TSMC at the Core of Taiwan Exposure

The Franklin FTSE Taiwan ETF offers low-cost exposure to Taiwan's microelectronics manufacturing base at a 0.19% expense ratio, with TSMC typically weighted at the 20% cap and the top 10 holdings at about 50% of assets.

Because of its heavy allocation to TSMC and allied hardware leaders, FLTW is exposed to foundry utilization rates, hyperscale server demand, and developments across the Taiwan Strait.