Navigator Launches 'Active ETF'.. 30% Independent Management (Update)

[Asia Economy Reporter Junho Hwang] On the 25th, Korea Investment Management will launch two types of equity active exchange-traded funds (ETFs). These products invest in eco-friendly automobiles and ESG. They will be launched under the exclusive active ETF brand 'Navigator.' The strategy is to establish a differentiated brand group from the passive ETF brand KINDEX.

Korea Investment Management announced on the 24th that it will list the 'Navigator Eco-friendly Automobile 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% is independently managed by the manager.

The Navigator Eco-friendly Automobile Value Chain Active ETF invests in companies within the value chain related to electric and hydrogen vehicles, including raw materials and parts manufacturing, energy transportation and charging, and finished vehicle production, focusing on stocks with high medium- to long-term growth potential. It is managed by Nam Kyung-moon, head of the equity management research team, who has a total of about 15 years of experience in the automobile industry, including 10 years as an automobile analyst at securities firms.

This ETF uses the 'FnGuide Eco-friendly Automobile Value Chain Index,' calculated by FnGuide, as its benchmark. This index consists of 50 stocks listed on the Korea Exchange and KOSDAQ that are highly related to eco-friendly automobile value chain technologies and have sound financial conditions. To achieve returns exceeding the benchmark, the ETF increases investment weights in stocks with improving performance or investment momentum depending on the timing. It also invests in newly discovered stocks through industry analysis and company visits.

The Navigator ESG Active ETF invests in companies evaluated as excellent in terms of ESG. It uses the 'MSCI Korea Country ESG Leaders Custom Capped Index' as its benchmark. MSCI constructs this index from ESG top-performing companies with a BB or higher ESG rating, excluding companies with serious ESG-related social controversies and those involved in alcohol, gambling, or weapons production. Korea Investment Management is the first to launch an active ETF focusing on ESG-related stocks domestically. This ETF is managed by Oh Hye-yoon, deputy head of equity management and also an ESG fund manager at Korea Investment.

The 'Navigator ESG Active ETF' seeks to outperform the index by applying weights to constituent stocks or adding promising stocks using its proprietary ESG evaluation system. ESG-related investments require the collection and evaluation of unstructured non-financial data, making the evaluation system and know-how highly important. Korea Investment 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 Management, said, "Equity active ETFs combine the advantages of existing ETFs, such as relatively low fees and ease of trading, with the benefits of active equity funds that seek excess returns over the market, making them a useful investment tool." He added, "Korea Investment Management plans to introduce additional active ETFs investing in various countries and asset classes to meet diverse investor demands."

Meanwhile, Korea Investment Management will hold events to raise awareness and promote trading of the Navigator active ETFs. Among SK Securities customers, the first 10 people who trade more than 2,000 shares daily of the Navigator Eco-friendly Automobile Value Chain Active ETF from the 25th to the 30th of next month will receive a cultural gift certificate worth 30,000 KRW. 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.