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Mirae Asset Global Investments Chief Officer Nathan Nam-ki Kim, head of the ETF management business unit, speaks at a press event held at the Mirae Asset Center 1 building in central Seoul, Friday. (Mirae Asset Global Investments) |
Mirae Asset Global Investments, a leading asset manager here, is to launch an equal-weight exchange-traded fund, suggesting a well-balanced investment strategy to its investors.
Mirae Asset’s Tiger US S&P-500 Equal Weight ETF is to be listed on the Korea Exchange, the country’s sole bourse operator, Tuesday. As its name suggests, the ETF product equally tracks the stocks of 500 leading companies listed on the S&P-500 index.
While most ETF products have their constituent stocks weighed depending on their market caps, an equal-weight scheme assigns the same weight to all its underlying stocks, regardless of their market capitalization.
“It is the first equal-weight ETF that tracks S&P-500 to be introduced in Asia,” Mirae Asset Global Investments Chief Officer Nathan Nam-ki Kim, head of the ETF management business unit, said at a press event held in central Seoul, Friday.
“Considering how the index manager Dow Jones usually operates, it is likely to be the only equal-weighted ETF tracking the S&P 500 in Korea for a while,” Kim said.
The asset manager explained the upcoming ETF product focuses on balanced investment, with an aim to ride on the growth of leading US shares while hedging losses. The product can help investors shift risks at times of high volatility, as when big-name US tech stocks have shed losses in recent days.
“Though the concept of an equal-weighted ETF may be unfamiliar, the products were very popular in the US last year,” said Kim Nam-ho, head of the fixed income, currency, commodity ETF management division, referring to the Invesco S&P 500 Equal Weight ETF that attracted a net inflow of $12.9 billion last year.
“Unlike other equal-weighted ETF products, Tiger US S&P-500 Equal Weight ETF is to rebalance its portfolio every quarter, maximizing the 'buy low, sell high' strategy."
He further suggested investors balance out their portfolios by allocating 70 percent of their investments in market-weight ETFs and 30 percent in equal-weight ETFs.
The incoming product is to boast the largest size among the ETF products here staked to the S&P-500 index, at 100 billion won ($72 million), the asset manager explained.
"Previously, small and midsized stocks generated larger gains than big shares at times of a rate-cut cycle. With a pending rate cut (from the US Federal Reserve), an equal-weight ETF could perform better," he said.
