This Year's ETF Investment Keyword 'D.R.A.G.O.N.'... Selected by Samsung KODEX

Monthly Dividends·Global REITs·Artificial Intelligence·Income Securing·Earnings Improvement·New Supply Chains
6 ETF Investment Trends to Watch This Year

Samsung Asset Management announced on the 3rd that it has selected 'D.R.A.G.O.N.' as the ETF investment keywords that investors should pay attention to in the 'Year of the Blue Dragon.' This is worth considering for investors seeking promising ETF investment methods amid challenging market conditions such as the US presidential election, expectations of interest rate cuts, and geopolitical risks.

The investment keyword 'D.R.A.G.O.N.' represents six investment areas in total. They stand for ‘Monthly Dividend (Dividend)’, ‘Global REITs (REITs)’, ‘Artificial Intelligence (AI&Robot)’, ‘Guaranteed Income (Guaranteed Income)’, ‘Earnings Surprise (Outlier)’, and ‘New Supply Chain (Next China)’ respectively.

Monthly dividend is an investment method that allows investors to enjoy capital gains while receiving dividends. With the ongoing high interest rate trend, bond yields are attractive, and given the robust US economic situation, investing in US corporate bond ETFs that pay monthly interest can also expect capital gains from bond price increases during periods of interest rate decline. ETFs that generate monthly dividend income using US dividend growth stocks that increase dividends annually and covered call strategies are also promising. Related ETFs include ▲KODEX iShares US Investment Grade Corporate Bond Active ▲KODEX iShares US High Yield Active ▲KODEX US Dividend Premium Active ETF.

Global REITs are expected to be a major investment target. With heightened expectations for global interest rate cuts this year, REITs are likely to benefit from reduced capital costs and increased dividend appeal in the global REIT market. The diversified US REIT market, including data centers showing growth due to AI development and communication base stations (cell towers) driven by the spread and increased usage of 5G, is a top choice. The Japanese REIT market, benefiting from a long-term weak yen and high dividend policies, is also expected to be advantageous. Investing in yen-denominated hedged products, given Japan’s lower interest rates compared to domestic rates, can also yield additional currency hedge profits. ETFs such as KODEX Dow Jones US REITs (H) and KODEX TSE Japan REITs (H) are worth considering.

Artificial intelligence remains an investment area to watch this year as well, following last year. With an aging population and declining birth rates leading to labor shortages, the shift to unmanned and automated systems has become an inevitable trend. Domestically, differentiated benefits are expected for core equipment companies related to high-bandwidth memory (HBM) and on-device AI. Additionally, with large corporations expanding investments in the robotics industry and existing strong small and medium enterprises accumulating technological capabilities, the domestic robotics industry is expected to grow significantly. Related products include KODEX US Semiconductor MV, KODEX AI Semiconductor Core Equipment, and KODEX K-Robot Active ETF.

The safety margin securing strategy, which was an ETF trend last year, is expected to continue this year. Due to high interest rates, elevated stock indices, and uncertain macro environments, demand for stable returns comparable to bank deposits is increasing. Income securing strategies through interest rate-linked and maturity-matching ETFs remain valid this year. ETFs popular among both institutions and individual investors include KODEX CD Rate Active (Synthetic), KODEX Short-Term Bond PLUS, and KODEX 24-12 Bank Bond (AA+ or higher) Active ETF.

Earnings improvement is also a key investment point this year. Differentiation and concentration by country, industry, and company are expected to expand further. Investment strategies targeting large US tech stocks that showed solid performance last year and small to mid-cap stocks expected to rebound are effective. ‘Seohak Gaemi’ ETFs, which mainly invest in US tech stocks and earnings surprise companies, will be an easy alternative. Representative ETFs include KODEX US Seohak Gaemi, KODEX US FANG Plus (H), and KODEX US Russell 2000 (H) ETF.

This year, global supply chain restructuring is expected to accelerate under US leadership. Interest in India, a key country in the new supply chain (Next China), is expected to increase further. India is attracting attention as a global manufacturing base due to its young population structure, low wages, and pro-business policies (Make in India). IT and semiconductor core companies in Korea, Japan, and Taiwan, which form the new supply chain alliance in Asia excluding China, are also expected to benefit. ETFs such as KODEX India Nifty 50, KODEX Asia Semiconductor Supply Chain ex-China Active, and KODEX Korea Taiwan IT Premier ETF are worth attention.

Kim Do-hyung, head of the ETF Consulting Division at Samsung Asset Management, said, "We expect high interest rates, high inflation, and high exchange rates to undergo new changes this year," adding, "We have selected ‘DRAGON’ as the ETF investment keywords to remember this year."

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