Korea's KEDI-based ETFs boom; net assets double in 2 months

South Korean exchange-traded funds (ETFs) tracking KEDI, an index set created by The Korea Economic Daily, are booming on growing investor demand for high-value options among theme-based portfolio and industry innovators.

Total net assets of KEDI-based funds, which were launched this year in the local ETF market that excludes debt ETFs, topped the market with a 30% share as of Aug. 19.

The 16 KEDI-based ETFs rolled out since 2022 logged 2.01 trillion won ($1.5 billion) in net assets as of Monday, doubling their value over the past two months.

The Korea Economic Daily is the only Korean news outlet to have launched a benchmark index. The company created its first index KEDI30 in September 2021, and based on the index, Mirae Asset Securities Co. rolled out the TIGER KEDI Innovator ESG30 ETF in February 2022.

Last year, the outlet developed another index based on a covered call strategy, which Shinhan Securities Co. uses for its SOL US Treasury 30Y Covered Call ETF.

So far this year, six asset managers launched 13 ETFs that track KEDI’s performances.

The newsgroup differentiated its first benchmark index by reflecting input from Korea’s business leaders and senior analysts to select companies with long-term potential.

TIGER KEDI Innovator ESG30 ETF, the first ETF to track KEDI, culls views from 100 chief executives in Korea to select innovative companies with better environmental, social and governance (ESG) performances. 

Shinhan’s SOL KEDI Mega Tech Active ETF tracks the KEDI Megatech index, which rebalances in June and December every year with companies in the artificial intelligence, robotics and aerospace industries. The active ETF posted a 49% return for the first 22 months since listing in October 2022.

Last year, The Korea Economic Daily created its first benchmark index based on overseas assets, the KEDI US Treasury 20-Year+ Covered Call Index.

The three ETFs  – SOL US Treasury 30Y Covered Call, TIGER 30Y Treasury Bond Premium Active and Kodex US Treasury 30-Year Bond Active – together manage more than 1.1 trillion won worth of net assets.

Among other ETFs based on KEDI are ACE Nvidia Value Chain Active and ACE Microsoft Value Chain Active, which seek capital appreciation by investing in a portfolio comprised of Nvidia Corp.’s top suppliers and Microsoft Inc.’s providers, respectively. Both funds are managed by Korea Investment Management Co.

There are around 10 more KEDI-based ETFs to be listed this year.

Write to Tae-Hoon Lee at beje@hankyung.com

Jihyun Kim edited this article.