Global Stock Markets Fluctuate... Money Flows into EMP Funds

Impact of Delta Variant and G2 Tightening Policies
Popularity of Ultra-Diversified Domestic and International ETF Funds

3.84% Return Over 3 Months
Seeking Stable Gains in Downturns
130.1 Billion KRW Inflows Over Three Months

[Asia Economy Reporter Minji Lee] As the Delta variant spreads and tightening policies by G2 (the US and China) cause global stock markets to fluctuate, more investors are turning their attention to EMP (ETF Managed Portfolio) funds. EMP funds are highly diversified funds that invest in exchange-traded funds (ETFs) or exchange-traded notes (ETNs) composed of individual stocks.

According to financial information provider FnGuide on the 27th, as of the 26th, the recent 3-month return of 45 EMP funds listed domestically was 3.84%, and the one-month return was 1.14%. The average 3-month return of domestic equity funds was 0.1%, and the one-month return was -3.6%. Instead of investing in individual ETFs or stocks, EMP funds can invest diversely in domestic and international ETFs, allowing for stable returns even in a downturn.

Recently, the global stock market has shown weakness reflecting the spread of the Delta variant, tightening policies in the US and China, and concerns about economic peak. The domestic stock market was no exception, with the KOSPI trading around 3120, down 5.6% from the year’s high of 3316.08 (June 25). The domestic stock market saw increased foreign investor outflows due to the fourth wave of COVID-19 and semiconductor peak controversies, which led to a stronger dollar.

Among individual funds, the best-performing was the ‘Mirae Asset Global Core Tech EMP Securities Investment Trust,’ which posted a 9.24% gain since the beginning of the year. This fund invests in global companies related to the 4th industrial revolution, such as ETFs related to semiconductors and secondary batteries. The main holdings included ‘VanEck Vectors Semiconductor ETF’ (16.7%), ‘Global X Lithium & Battery Tech ETF’ (11.6%), ‘iShares Semiconductor ETF’ (10%), ‘Global X Cloud Computing ETF’ (6.7%), and ‘TIGER US Philadelphia Semiconductor Nasdaq ETF’ (4.8%). Other funds with stable returns included ‘Samsung Mildang Daramswi Global EMP Securities Investment Trust’ (7.55%), ‘Hanwha Global Megatrend EMP Securities Investment Trust’ (7.24%), ‘Hyundai AIM Signature Global EMP Securities Investment Trust’ (6.62%), and ‘KTB Global EMP Securities Investment Trust’ (6.55%).

As more investors seek to manage returns through global diversification, the assets under management have also been increasing. EMP funds attracted 130.1 billion KRW over the past three months and 62 billion KRW in the last month alone. By fund, IBK Plain Vanilla EMP (42.5 billion KRW) saw the largest inflow, followed by KTB Global Multi-Asset Income EMP (42.1 billion KRW) and Samsung Reliable Four Seasons EMP (9.6 billion KRW). IBK Plain Vanilla EMP mainly invests in developed market growth companies and high-dividend income ETFs. Its major stock holdings include ‘VANGUARD S&P 500 ETF’ (25%), ‘GLOBAL X NASD 100 COV CALL ETF’ (11%), ‘Macquarie Infrastructure’ (8.87%), ‘ISHARES CORE MSCI EUROPE’ (7.3%), and ‘SPDR Dow Jones Industrial Average’ (7%).

Park Okhee, a researcher at IBK Investment & Securities, explained, "Although the US stock market hesitated around the time of the Federal Reserve’s tapering start in 2014, it also continued its upward trend. The key to portfolio composition is to focus on US-style ETFs while also including high-dividend stocks, preferred stocks, and Korean-style ETFs related to infrastructure or K-New Deal policies expected to benefit from government support, which is positive."

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