Korea Investment Trust Management Launches Two Types of Equity Active ETFs 'Navigator'

[Asia Economy Reporter Minji Lee] Korea Investment Trust Management announced on the 24th that it will launch two types of equity active exchange-traded funds (ETFs).

They chose ‘Navigator’ as the exclusive brand for active ETFs, differentiating it from the existing passive ETF brand ‘KINDEX.’ Starting with products related to eco-friendly vehicles and ESG, they plan to introduce a series of active ETFs investing in various countries and asset classes in the future.

On the 25th, they plan to list the ‘Navigator Eco-friendly Vehicle Value Chain Active ETF’ and the ‘Navigator ESG Active ETF’ on the Korea Exchange. Unlike passive ETFs that simply track the performance of a benchmark index, active ETFs are managed by fund managers who have discretion over a portion of the assets to pursue returns exceeding the benchmark. At least 70% of the assets track the benchmark index (maintaining a correlation coefficient of 0.7 or higher), while the remaining 30% reflects the manager’s expertise.

The ‘Navigator Eco-friendly Vehicle Value Chain Active ETF’ invests in companies with high mid- to long-term growth potential within the entire value chain of electric and hydrogen vehicles, including raw materials and components manufacturing, energy transportation, storage, charging, and finished vehicle production. The ETF is managed by Nam Kyung-moon, head of the equity management research team, who has researched the automotive industry for over 15 years, including 10 years as an automotive analyst at a securities firm.

The benchmark index is the ‘FnGuide Eco-friendly Vehicle Value Chain Index.’ This index consists of 50 stocks listed on the Korea Exchange and KOSDAQ that have high relevance to eco-friendly vehicle value chain technologies and sound financial conditions. To achieve returns exceeding the benchmark, the ETF will increase investment weights in stocks with improving performance or investment momentum depending on timing, and also invest in newly discovered stocks through industry analysis and company visits.

The ‘Navigator ESG Active ETF’ invests in companies evaluated as excellent in environmental, social, and governance (ESG) aspects. Its benchmark index is the ‘MSCI Korea Country ESG Leaders Custom Capped Index,’ calculated by Morgan Stanley Capital International (MSCI). MSCI constructs this index from ESG top-rated companies with a BB rating or higher, excluding companies with serious ESG-related social controversies and those involved in alcohol, tobacco, gambling, nuclear power, or weapons production. This is the first active ETF in Korea Investment Trust Management’s history to focus on ESG-related stocks domestically.

The ‘Navigator ESG Active ETF’ plans to pursue excess returns compared to the index by applying weights to constituent stocks or adding promising stocks using its proprietary ESG evaluation system. Since ESG-related investments require the collection and evaluation of unstructured non-financial data, the evaluation system and know-how are crucial. Korea Investment Trust Management views its dedicated ESG personnel, proprietary ESG evaluation system, and long-term experience managing domestic pension fund social responsibility investment (SRI) funds as differentiated strengths in managing this ETF.

Jung Sung-in, head of the ETF Strategy Team at Korea Investment Trust Management, said, “Equity active ETFs combine the advantages of existing ETFs, such as relatively low fees and ease of trading, with the advantages of traditional active equity funds that seek excess returns over the market. We plan to introduce additional active ETFs investing in various countries and asset classes to meet diverse investor demands.”

To raise awareness and activate trading of the Navigator active ETFs, promotional events will be held. Among SK Securities customers, the first 10 people who trade more than 2,000 shares daily of the ‘Navigator Eco-friendly Vehicle Value Chain Active ETF’ from the 25th until the 30th of next month will receive a 30,000 KRW cultural gift certificate. The first 20 people who trade more than 1,000 shares daily will receive a 10,000 KRW cultural gift certificate. During the same period, among KB Securities customers who trade more than 300 million KRW daily of the ‘Navigator ESG Active ETF,’ the top 10 by daily trading amount will receive a 50,000 KRW cultural gift certificate.

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