DS Asset Management announced on July 10 at a press conference at Korea Exchange (KRX) in South Korea that its first ETF, the “DS KOSDAQ Active ETF,” will be officially listed on July 14. This is an active ETF focused on leading companies in the KOSDAQ market’s structural growth industries; its management fee is set at 1.00% per year.
Key Stock-Picking Differentiation of the DS KOSDAQ Active ETF: Index Coverage of 60%
According to remarks from Jeong Sung-in, Director of the ETF Team at DS Asset Management, about 86% of the companies in the KOSDAQ 150 index have market capitalizations of at least 1 trillion won; the strategy focus of the DS KOSDAQ Active ETF is to actively allocate to the remaining 40% of the market not covered by KOSDAQ 150, with companies expected to have market caps below 1 trillion won making up more than 60% of the portfolio.
Jeong said, “The KOSDAQ 150 index only covers about 60% of the total market capitalization of the KOSDAQ market. Our strategy is to fully seek out excess returns in the remaining 40% of the market that is not covered by the major index.” Kim Sung-hoon, CEO, said the company will mobilize its internal capabilities—such as research strength and leading stock performance—as the core competitive advantage of the ETF.
Current State of the KOSDAQ Market and DS Asset Management’s Research Advantage
According to DS Asset Management’s description, its KOSDAQ market selection criteria are as follows: among more than 1,800 listed companies on the KOSDAQ, insufficient institutional research spending has led to severe information asymmetry in the market; the ability to conduct deep analysis of individual stocks can directly translate into performance differences. Since its establishment in 2008, DS Asset Management has used a database that began tracking companies even before they went public to screen for high-growth-potential firms in KOSDAQ.
Chief Investment Officer Hyeon Sang-gyun said, “Allocating assets by market-cap weighting would prevent the fund from fully reflecting a company’s valuation; DS Asset Management can identify a company’s value and sensitively reflect how the fundamentals change over time.”
Jeong also noted that earnings growth in semiconductor components and materials companies is beginning to show up in the KOSDAQ market. In addition, government policies—including measures to push out bankrupt firms and the introduction of up- and down-listing systems—as well as expected institutional capital inflows after changes to the benchmark index; the above are Jeong’s personal views.
FAQ
Why is the management fee for the DS KOSDAQ Active ETF set at 1%?
According to DS Asset Management’s description, the 1.00% annual management fee is currently the highest level in the industry; the company said it will make up the gap with performance, emphasizing that its research-driven active management capability is the core basis for the higher fee. Actual post-fee ETF performance is subject to official fund data.
How does the DS KOSDAQ Active ETF differ from an ETF tracking the KOSDAQ 150 index?
According to DS Asset Management’s description, the KOSDAQ 150 index covers only about 60% of the total market capitalization of the KOSDAQ market, and about 86% of its constituent companies have market capitalizations of 1 trillion won or more. The DS active ETF plans to actively allocate to the 40% of the market not covered by the index, with companies expected to have market caps below 1 trillion won making up more than 60% of the portfolio. The specific portfolio is subject to the official fund prospectus.
How does DS Asset Management use AI to manage this ETF?
According to a report, DS Asset Management plans to roll out an AI-based management and analysis system, AI daily management reports, and rebalancing reviews as part of a scientific management and investor communication plan; the specific AI system specifications and operating methods are subject to DS Asset Management’s official announcements.
