Stock Market High-End Capital Choice Question: AI Dream Stocks vs Steady Cash Flow, Who is the True Driver of Shengwangsheng's Rise

When the stock market hits new highs but falls into volatility, the market’s true attitude is revealed through capital flows. Recently, the Taiwan stock market broke through 28,400 points, but the most active trading wasn’t in tech giants, but in a class long forgotten by the market—the “cash flow generators”—high-yield ETFs. What does this reflect? Investors are redefining the meaning of “quality assets.”

The Hidden Concerns Revealed by the US Stock Quality Battle: Accounts Receivable vs Actual Cash

To understand the current market logic, we must first look at what’s happening in the US stock market. Two US ETFs with over $10 billion in assets—Invesco S&P 500 Quality (SPHQ) and iShares MSCI USA Quality Factor (QUAL)—both claim to invest in “quality companies,” but due to a key difference in stock selection criteria, their holdings are vastly different.

SPHQ’s core screening metric focuses on an often-overlooked financial figure: accounts receivable to profit ratio. Simply put, it cares not about book profits but about the proportion of “cash actually received.” As a result, this fund has been gradually reducing holdings in AI giants like NVIDIA, Meta, and Microsoft this year—not because it’s bearish on tech stocks, but because it uncovered an awkward truth: these companies, while investing heavily in AI, are also seeing a surge in accounts receivable.

Take NVIDIA as an example. Its latest financial report shows a $16 billion increase in accounts receivable, meaning the company must front a large amount of cash and wait for customers to settle. This cash flow pattern exerts invisible pressure on financial health. Conversely, QUAL does not use this metric, so its portfolio remains heavily weighted toward tech stocks, leading to dramatic performance swings over different periods.

This controversy points to a sharp question: Are the hundreds of billions of dollars that tech giants are pouring into AI future profit gold mines, or short-term cash flow black holes?

The Wise Choice of Taiwan Stock Investors: From Chasing Dreams to Protecting Cash Flow

Similar market concerns are also influencing capital allocation in Taiwan stocks. Data shows that in the past month, five of the top ten passive Taiwan ETFs by daily average trading volume are high-yield products—namely, Yuanta Taiwan High Dividend (00919), Cathay Sustainable High Dividend (00878), Fubon Select High Dividend 30 (00900), Yuanta High Dividend (0056), and Yuanta Taiwan Value High Dividend (00940). This is no coincidence; it’s a rational choice of capital at high levels.

00919 has risen 2.33% in recent months, outperforming the broader market and maintaining an annualized dividend yield of over 10% for 11 consecutive quarters. Its manager, Hsieh Ming-Chih, openly states that when the stock market is high, some funds are shifting from overhyped AI concept stocks to value-oriented targets with reasonable valuations, stable operations, and dividend potential, especially financial stocks.

Why have financial stocks become a key allocation in high-yield ETFs? In a declining interest rate trend, financial institutions’ profit bases become more stable, and dividend payout potential is highly certain. This “growth stocks paired with value stocks” allocation logic not only pursues income but also captures spread opportunities during market rotations. 00919’s steady quarterly dividend of NT$0.54 (ex-dividend on December 16) exemplifies this strategy.

From Uncertainty to Certainty: A Shift in Investment Mindset

BlackRock’s Chief Investment Strategist Wei Li once admitted that the variables brought by AI are too large, and the current “invest first, expect future income later” model has yet to be proven profitable. This explains why, at market highs, smart capital is flocking to high-yield ETFs—rather than chasing the variable-filled AI dream, it’s better to hold assets with high cash flow certainty.

Dimensional Fund Advisors’ Research Director Mamdouh Medhat’s view is even more straightforward: quality investments don’t need to be complicated. Locking in companies with stable profits, reasonable valuations, and avoiding excessive capital expenditure can generate excess returns over the long term. This logic is the core driver behind the outperformance of high-yield ETFs in Taiwan.

Conclusion: Finding Certainty in Uncertainty

When the Taiwan stock market hits new highs, capital flows tell all. High-yield ETFs are becoming safe havens amid market volatility, reflecting not market pessimism but a more mature risk management awareness among investors. Whether it’s the debate over the definition of “quality” in US stocks or Taiwanese investors’ preference for stable cash flow, they point to the same core logic:

In environments of high uncertainty, companies with strong financial health, stable cash flow, and a willingness to reward shareholders are the true foundation of long-term investment.

For investors, rather than obsessing over whether to heavily weight AI concept stocks, it’s better to hold a carefully selected basket of high-yield stocks—participating in market growth while reducing volatility risk. This balanced asset allocation strategy may be a smarter choice in the current environment.