Taiwan's semiconductor-focused ETFs are massively outperforming the broader market even as foreign investors pull money out of Taiwanese stocks — good news for investors who picked the right funds, bad news for anyone just tracking the index.

• Eight Taiwan stock ETFs beat the index over the past year, six of them semiconductor-focused, with returns above 100% versus around 66% for the overall market.
• One actively managed fund grew its assets more than 12-fold as investors piled in, showing money is flowing into selective winners even during the pullback.
• Fund managers blame the recent tech selloff on disappointing results from a major U.S. chip equipment maker and pre-election jitters, but say big U.S. tech firms are still financially solid.
• Taiwan's chip industry looks strong underneath the noise: TSMC confirmed demand stays high, and Taiwan's export orders broke records, which backs up the case that Taiwan remains central to global chip supply.
• Separately, record one-day foreign selling of Taiwanese stocks hit after hot U.S. inflation data revived rate-hike worries, compounded by a holiday weekend, but history shows Taiwan stocks usually bounce back once foreign selling fades, especially tech-heavy funds.

Outlook: Analysts expect the pullback to be a buying opportunity, favoring semiconductor and chip-design ETFs for the next leg up once the current volatility settles.