Three new thematic equity ETFs have listed on Korea Exchange.
NH-Amundi and KBSTAR have both introduced new thematic equity ETFs in Korea.
NH Amundi and KBSTAR have both launched funds providing exposure to 5G companies, while the latter has also introduced an ETF linked to the ‘hydrogen economy’.
Each ETF comes with an expense ratio of 0.45% and tracks an index created by Korean financial data company FnGuide.
Constituents are selected from a universe of common stocks listed within the KOSPI (large-cap) or KOSDAQ (mid and small-cap) trading markets of the Korea Exchange subject to size and liquidity constraints.
Additionally, a financial filter screens out firms with poor quality metrics such as negative net income over the past two years or a current ratio below 10%.
The indices then harness FnGuide’s keyword analysis tool that uses machine learning to scour company documents and industry analysis reports to determine a firm’s relevance to the underlying theme based on the frequency of certain keywords.
5G
5G (industry short form for ‘fifth generation’) refers to the latest generation of cellular mobile communications and the innovation and infrastructure that supports the technology. The ETFs aim to include companies across the 5G value chain while excluding telecom operators.
The NH-Amundi HANARO 5G Industry ETF (367740 KS) tracks the FnGuide 5G Industry Index which selects the 30 stocks with the highest keyword relevance scores and weights them by market cap.
The KBSTAR Fn5G Tech ETF (367760 KS) meanwhile is linked to the FnGuide 5G Tech Index which applies a slightly different methodology. It screens for all firms with a keyword relevance score above a pre-defined level and then selects the 60 largest constituents and weights them by market cap.
Hydrogen economy