00981A Annual profit of 61% but criticized? Giant Jay criticizes ETF for peeling two layers of skin! Experts have a different opinion

00981A Due to the purchase of ETFs such as 0050 and 0052 triggering the “nesting doll” controversy. Trader Giant Jie criticizes this move as peeling two layers of skin, questioning whether the manager offers passive performance at an active fee rate. DeFi commentator Yu Zhe’an and researcher Freddy counter, stating that allocating to ETFs can reduce slippage costs and bypass regulations limiting single holdings to 10%. In a market with a high weighting in TSMC, this is a pragmatic strategy to track Beta and optimize liquidity.

Vincent, co-founder of Manbao and former J.P. Morgan Asset Management Executive Director, also said that holding limits are actually a pain point for many funds. In his previous work experience, his team often tried to find ways to keep fund performance aligned with TSMC’s trend. Knowing they should buy more TSMC but having to cut holdings due to the limit.

Renowned trader Giant Jie: 00981A Peels Two Layers of Skin from Investors

Recently, trader Giant Jie called out the unified active ETF (00981A) on social media, calling it Taiwan’s first “nesting doll” type ETF, sparking market discussion. He pointed out that 00981A charges higher fees under the guise of active management, yet significantly buys passive ETFs like Yuanta Taiwan 50 (0050) and Fubon Technology (0052), questioning whether it is truly active or passive.

Giant Jie used the metaphor “Michelin chef serving McDonald’s” to satirize investors paying active management fees but getting passive index exposure; he also bluntly said this move is akin to bypassing the single holding limit, indirectly holding TSMC. Besides strategic logic, he criticized this structure for causing “costs within costs” through peeling fees, joking that if 00981A continues expanding its ETF holdings, it might become the “King of ETF nesting dolls.”

00981A’s return rate is 61.6%, researcher Yu Zhe’an: Evaluating from trading costs, not lazy

Regarding the controversy, researcher Yu Zhe’an offered a more pragmatic analysis. He pointed out that allocating to other ETFs within active funds can practically achieve multiple effects: ensuring a minimum Beta, increasing liquidity, reducing redemption impact, quickly establishing sector exposure, and optimizing beneficiaries’ interests under regulatory restrictions.

Yu Zhe’an further used data to show that even with double management fees, the additional annualized cost is only about 0.0031%. Compared to trading slippage that can exceed 0.5% in small to mid-cap stocks, the overall cost of ETF allocation in a single redemption scenario is significantly lower. He believes that, from a comprehensive assessment of actual trading costs, securities transaction taxes, and market liquidity, this move by managers is not necessarily lazy but a priority to consider investors’ overall interests.

Vincent, co-founder of Manbao and former J.P. Morgan Asset Management Executive Director, also said that holding limits are a pain point for many funds. In his previous work experience, his team often tried to find ways to keep fund performance aligned with TSMC’s trend. Knowing they should buy more TSMC but having to cut holdings due to the limit.

Researcher Freddy: Under the 10% single stock limit, it is a reasonable operation

Researcher Freddy believes that structuring active ETFs as a “fund of funds” is not inherently wrong; the key still lies in whether the investment objectives align with beneficiaries’ expectations. He pointed out that under the 10% single stock limit and increased market volatility, using ETFs to quickly adjust overall Beta, reduce cash drag, or maintain full positions during large capital inflows are reasonable managerial considerations.

Additionally, ETFs can effectively reduce price impact on core holdings during large redemptions. Freddy bluntly said that if investors only pursue leveraged Beta or style factors, they don’t need to choose active ETFs; but if the goal is risk-adjusted Alpha, market timing itself can be a source of value. He summarized that many pension funds and sovereign funds already adopt similar structures, and simply criticizing fund of funds on the surface often overlooks the practical division of labor and restrictions in institutional investing.

This article “00981A earns 61% annually but gets criticized? Giant Jie criticizes ETF nesting doll peeling two layers of skin! Experts have different views” first appeared on Chain News ABMedia.