While US ARK Sinks... 'Korean Version of ARK' Launched One After Another

[Asia Economy Reporter Junho Hwang] The ARK Innovation ETF (ARKK), led by Cathie Wood and symbolizing active exchange-traded funds (ETFs), has experienced a decline of over 34% from its peak this year. Meanwhile, eight active ETFs are set to debut in South Korea. Most of these ETFs, like ARKK, focus on investing in future mobility, leading analysts to suggest that their popularity may face challenges.

According to the financial investment industry on the 20th, a total of eight active ETFs will be listed on the Korea Exchange on the 25th. Active ETFs allow fund managers to actively manage about 30% of the investment assets. Depending on management skills, ETF returns can exceed the growth rate of stock indices.

The new products mostly invest thematically in technology stocks, similar to ARKK, which concentrated on Tesla and achieved a 154% return last year. Among these, the investment proportion in future mobility is relatively high. The products were structured as a "Korean version of ARKK" following ARKK's success.

Specifically, Samsung Asset Management will launch products investing in renewable energy and future automobiles, respectively. Mirae Asset Global Investments will offer ETFs investing in future mobility and overseas battery, bio, internet, and game sectors (BBIG). Korea Investment Management will focus on eco-friendly cars and environmental, social, and governance (ESG) factors, while Timefolio Asset Management will release ETFs investing in the KOSPI index and domestic BBIG sectors.

However, unlike last year, the market conditions this year are unfavorable for these products. Recently, due to COVID-19 vaccine supply and rising raw material prices, inflation has increased, causing technology stocks to experience significant declines. This trend is expected to continue into the second half of the year, making it difficult to guarantee strong performance.

As of the 19th, ARKK's return has dropped 17.5% since the beginning of the year and 34.08% from its highest point this year. ARKK, which ranked fifth among overseas investment stocks net purchased by domestic investors in January (with $16.535 million), has not even made it into the top 50 this month.

An asset management industry official explained, "Although the timing is difficult, returns will ultimately vary depending on management capabilities. Since the legal foundation for structuring active ETFs was established last September, the launch of active ETFs is meaningful in terms of expanding the base."

This content was produced with the assistance of AI translation services.