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An exterior view of Yeouido's financial district in Seoul. (Yonhap) |
South Korea‘s stock bourse will add eight new actively managed exchange traded funds that partially employ active stock picking in addition to tracking listed equities starting on Tuesday.
The Korea Exchange on Friday approved the listing of the eight actively managed equity ETFs on the Kospi board, in addition to the three existing products launched in 2020, in what is regarded as the fledging market of active ETFs. Korea is home to ETFs with a combined value of 60 trillion won ($53.2 billion) and also has 11 active bond ETFs.
Four assset management firms -- Mirae Asset Global Investments, Samsung Asset Management, Timefolio Asset Management and Korea Investment Management -- will manage two active ETFs, respectively.
Unlike traditional baskets of securities tradable on an exchange that adopt passive scheme, active ETFs combine the ETFs’ nature of cost-efficiency with the active style of portfolio allocation to maximize investment return.
Fund managers say that the domestic industry is taking preemptive actions to meet growing demand from investors who already have invested in active equity ETFs launched in the United States.
For example, New York-based Ark Invest‘s flagship active ETF products -- ARK Innovation ETF and ARK Genomic Revolution ETF -- were among Korean investors’ 50-largest foreign listed investment destinations over the past 12 months until Friday, according to data by the Korea Securities Depository.
“More fund management firms will race to launch homegrown active ETFs to keep pace with the global trend,” Jeong Seong-in, head of ETF strategy team at Korea Investment Management, told reporters in a virtual conference Monday.
Korea Investment‘s upcoming products will be thematic ETFs, each associated with developments of green mobility value chain and improvements in environmental, social and governance factors.
Likewise, three other managers’ active equity ETFs will focus on green mobility, energy, internet and biotechnology. One exception is Timefolio‘s product that uses the broad-based Kospi as the benchmark.
Of the four fund managers, Timefolio is making a debut on the local ETF market, becoming the 16th fund manager to trade its ETFs in Korea.
The debut of eight active ETFs will “signal the era of active ETFs in Korea” and at the same time “lower the entry barrier for asset management firms into the ETF market,” the KRX said in a statement Friday.
So far, Korea is home to 469 ETFs. Some 3.7 trillion-won worth of ETFs are transacted daily on average, as 8 billion won in net asset value has been added in less than five months.
By Son Ji-hyoung (
consnow@heraldcorp.com)
