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While asset managers are pouring out exotic theme-type exchange-traded funds (ETFs) with the title of ‘the first in Korea’, the results are polarizing. The timing of listing is particularly important for theme-type ETFs, and if they are listed at a time when the stock price of the related stock is at its peak, the return is generally sluggish. However, it is difficult to commercialize ETFs on a theme that has not yet appeared. Even ETFs that have jumped on popular themes like the metaverse often plummet as soon as the theme cools down. There are voices in the financial investment industry that we need to be more cautious regarding investing in themed products.
According to the Korea Exchange on the 19th, the returns of the first ETFs in Korea with the themes of golf, rare earths, aerospace, water industry, and nuclear power generation are generally sluggish. Only some of the first ETFs in Korea, such as the US ETF industry and the US alternative investment industry, are showing relatively good returns.
NH-Amundi Asset Management’s ‘HANARO Fn Golf Theme’, listed on November 24 last year, drew attention as Korea’s first golf industry-themed ETF. However, the cumulative return from listing until the 18th of this month was -26.91%, showing a sluggish figure. The recent one-month return has also been -4.55%, showing little improvement in performance.
Although many sports are incorporated, the fact that the golf theme has lost strength this year can be seen by looking at the stock price of Golfzon, the leader of golf. As the golf population surged due to COVID-19, the stock price of Golfzon soared 152% last year, but plunged 20% in June this year alone. Considering the performance of the golf zone, the analysis that it is undervalued and the opinion that it is difficult to achieve growth beyond the pandemic phase are mixed. In a report published on the same day, SK Securities researcher Yoon Hyuk-jin said, “The stock price of Golf Zone has fallen by more than 20% from its peak due to the sharp drop in the stock market. The ship is undervalued,” he said.
Hanwha Asset Management’s ‘ARIRANG Global Rare Earth Strategic Resource Company MV’, which had soared to 1,1200 won until April, also fell below 8,000 won and fell into a slump. Since its listing on January 18, the yield has fallen to -19.64%. The recent one-month yield has also been sluggish at -6.35%. This product invests in companies around the world that mine, refining, and recycling rare earths and rare metals used in electric vehicle drive motors, secondary batteries, smartphones, and displays. Rare earth is a rare resource, with the largest amount of reserves in China and the largest production of rare earths in China. U.S. Treasury Secretary Janet Yellen, who is visiting South Korea, said in an interview with Archyde.com that she is committed to reducing China’s reliance on rare earths.
Nuclear-themed ETFs also performed poorly compared to expectations. On the 28th of last month, Korea Investment Trust Management and NH-Amundi Asset Management launched the first nuclear power plant-themed ETF in Korea. However, it is evaluated that the share price momentum has not disappeared because the Yoon Seok-yeol government is highly likely to include nuclear power in the eco-friendly energy (K taxonomy) category.
The ETF industry ETFs of Kiwoom Investment Asset Management and Samsung Asset Management, which invest in ETF managers and index operators, are performing relatively well. Kiwoom Management first came out with the product, and the rate of return following listing was -6.91%, but the recent one-month rate of return was 9.03%. Since its listing on May 17, Samsung Management’s products have been performing well in a bear market with a return of 6.17% and a return of 9.82% in the past one month. ETFs are evaluated as having unlimited growth potential because of their strengths such as convenience of investment, variety of products, and low fees. Global ETF net assets rose from $3.423 trillion in 2016 to $9.486 trillion last year.
‘ARIRANG U.S. Alternative Investment Top10MV’, which invests heavily in managers with strengths in alternative investments, such as Blackstone, Brookfield, Carlyle, and KKR, also rose 6.90% in the past one month and recovered its share price of 10,000 won.
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