Recently, I’ve noticed many people asking how to buy fractional ETF shares, especially those investors whose funds aren’t enough to buy a full ETF lot. Honestly, this is a good question because buying ETFs on the Taiwan stock market is a bit special.

You might not know that the basic trading unit on the Taiwan stock market is “one lot,” which is 1,000 shares. For example, the popular Yuanta Taiwan 50 ETF has a closing price of around NT$160, so buying a full lot costs over NT$160k. That’s a huge amount for small investors. But the good news is, ETFs can be bought in fractional shares. In recent years, Taiwan’s fractional share trading mechanism has become more and more refined, and transaction fees have also decreased.

Regarding how to buy ETF fractional shares, the process is actually quite simple. First, you need to understand that fractional shares are units of ETF less than 1,000 shares, meaning between 1 and 999 shares. Trading occurs during two periods: intraday and after-hours. During trading hours, you can place electronic orders; after-hours, you can call or go to the counter. As for fees, most brokerages now offer discounts. Previously, the minimum fee was NT$20, but many now have lowered it to NT$1, making fractional share trading much more friendly.

Let me do some cost calculations. Suppose you buy 200 shares of Yuanta Taiwan 50 at NT$161.65 per share. The transaction fee is about NT$29.95 (considering a 35% discount). When selling, you also pay a 0.1% transaction tax. Overall, the costs aren’t too high. Interestingly, if you buy 1,000 shares in fractional units, as long as you buy more than 5 shares in a single transaction, the fee is roughly the same as buying a full lot, so you don’t really lose out.

One thing to note about fractional share trading is that the transaction price may differ from the full lot price, and the bid-ask spread can be larger. Also, liquidity is usually lower than for full lots, especially after-hours trading. Less popular stocks might take a long time to execute or might not be tradable at all. However, for high-volume ETFs like Yuanta Taiwan 50, this is usually not an issue.

If you want a more flexible approach, there’s also CFDs. CFDs can offer leverage, such as 10x, meaning an investment that would normally cost $223.91 USD only needs $22.39 USD, greatly lowering the entry barrier. Plus, CFDs support 24-hour trading, allowing both long and short positions, with better liquidity. But keep in mind, CFDs carry higher risks and require careful risk management.

By the way, buying fractional shares also entitles you to dividends. The more shares you hold, the more dividends you receive. Many regular investors use fractional shares to accumulate high-dividend ETFs.

In summary, the most straightforward way to buy ETF fractional shares is to open a brokerage account, select “intraday fractional shares” or “after-hours fractional shares” in the app, enter the number of shares and price you want. If you want lower costs and higher efficiency, CFDs are also a good alternative. The choice depends mainly on your capital, risk tolerance, and trading habits.