Active ETFs on the Rise... Major BBIG Posts 15% Returns

[Asia Economy Reporter Minji Lee] In a dull sideways market, the returns of active ETFs, where fund managers actively intervene in portfolios to pursue excess returns, are gaining attention.

According to the Korea Exchange on the 11th, among active ETFs over the recent two months (June 10 to August 10), the fund with the highest return was Timefolio Asset Management’s ‘Timefolio BBIG,’ which achieved a return of 15%. This outperformed the benchmark KRX BBIG K-New Deal Index (10%). Mirae Asset Global Investments’ ‘TIGER Global BBIG,’ which follows the same theme, posted returns in the 14% range. During this period, the KOSPI only rose about 0.57%, from 3224.64 to 3243.19.

The strong performance of the BBIG (Battery, Bio, Internet, Game) theme was due to significantly improved earnings forecasts for major companies related to bio, battery, and internet sectors. The Timefolio BBIG fund, which had the highest returns, included stocks in the following order: EcoPro BM (7.97%), Kakao Games (7.11%), Samsung SDI (6.77%), NAVER (6.54%), Samsung Biologics (6.09%), and L&F (5.47%). EcoPro BM, a secondary battery-related stock with a high weighting, rose about 69% over two months, boosting the fund’s returns. Daejun Kim, a researcher at Korea Investment & Securities, said, “BBIG tends to respond more sensitively to future growth than current earnings, and when economic recovery expectations weaken, its rise tends to accelerate significantly. Since China’s economic recovery is weaker than before and the spread of the Delta variant increases the likelihood of poor indicators, interest in BBIG will grow more than in cyclical stocks.”

The returns of mobility and ESG (Environmental, Social, Governance) themed funds showed differentiated performance depending on the stocks held. Mirae Asset Global Investments’ ‘TIGER Future Mobility Active (9%)’, Korea Investment Trust Management’s ‘Navigator Eco-friendly Car Value Chain (7%)’, and Samsung Asset Management’s ‘KODEX K-Future Car (2.2%)’ recorded widely varying returns. Regarding ESG, returns also varied depending on the stocks selected by the fund managers, with ‘KODEX K-Renewable Energy (7%)’ and ‘Navigator ESG (1.6%)’ showing divergent performances.

Meanwhile, in the second half of this year, it is expected that small and mid-sized asset management companies such as NH-Amundi Asset Management and Meritz Asset Management will continue to launch active ETFs. An industry insider said, “Active ETFs have lower fees than public funds, which could attract more investors. As the ETF market continues to grow, small and mid-sized asset managers will also seek to expand their market share by launching active ETFs.”

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