As Korea’s stock market rapidly broke through the 8,000-point milestone, the market for equity active exchange-traded funds (ETFs) has also expanded. In particular, as the share prices of some large-cap stocks such as Samsung Electronics (005930.KS) and SK hynix (000660.KS) outpaced the overall index gains, individual investors are also shifting funds into ETF products with high weightings in stocks showing clear price increases.
According to Koscom CHECK on Monday, the total net assets of Korea’s equity active ETFs stood at 15.62 trillion won as of the 5th of this month. This represents an increase of about 14.8% from the total net assets of 13.63 trillion won as of May 4, the first trading day of May. Unlike passive ETFs that simply track a specific index, active ETFs aim to generate returns in excess of the index by adjusting stocks and weightings based on fund managers’ judgment.
Funds are flooding into active ETFs because the gains of some large-cap stocks are outpacing the overall index. On the 1st and 2nd of this month, the KOSPI rose 3.68% and 0.15% respectively on a closing basis, setting record highs, while Samsung Electronics, the top stock by market capitalization, rose 10.09% and 3.29%. In this situation, products that mainly hold stocks with prominent gains are bound to be more attractive than ETFs that simply track the index.
In fact, among active ETFs, products that increased their weightings in Samsung Electronics and SK hynix posted solid performance. As of the 5th of this month, the “ACE Life Asset Shareholder Value Active” recorded the highest outperformance rate against its benchmark over the past month at 23.48%. It is an ETF product that holds more than 50% in three stocks: Samsung Electronics, SK Square (402340.KS), and SK hynix. Other products centered on Samsung Electronics and SK hynix, such as “BNK Shareholder Value Active,” “RISE Non-Memory Semiconductor Active,” “KoAct AI Infra Active,” and “PLUS K Manufacturing Core Companies Active,” followed.
As demand for active ETFs grows, asset managers are also actively launching related products. During the month of May, five Korean equity active ETFs were listed: “TIGER KOSDAQ Active,” “ACE High Dividend Plus Covered Call Active,” “MIDAS KOSDAQ Active,” “KoAct KOSPI Active,” and “UNICORN KOSDAQ Bio Active.”
