KIWOOM US Tech 100 Monthly Target Hedge Active ETF Proves Volatility Defense Effectiveness

Kiwoom Asset Management announced on November 26 that the 'KIWOOM US Tech 100 Monthly Target Hedge Active ETF' has delivered positive returns and demonstrated clear downside protection, even amid heightened volatility in the US market centered on technology stocks.

In the US stock market, concerns over overheating in artificial intelligence (AI) investments and valuation pressures on big tech companies have led to a broader correction focused on technology stocks. In fact, the Nasdaq 100 Index fell by 3.69% from the beginning of this month through the 21st, reflecting increased short-term volatility.

During the same period, the KIWOOM US Tech 100 Monthly Target Hedge Active ETF rose by 1.76%, showing a contrasting trend to the Nasdaq 100 Index. This demonstrates that the ETF’s strategy structure, which limits losses during downturns, has worked effectively in the actual market.

As of the 21st, the ETF posted returns of ▲2.89% over the past month, ▲10.35% over the past three months, and ▲10.27% since its listing on July 22. It has maintained a solid performance despite global market volatility. In comparison, the Nasdaq 100 Index recorded ▲-0.59% over the past month, ▲9.28% over the past three months, and ▲10.76% since the ETF’s listing.

The ETF behaves like an equity ETF when the market rises, but shifts to function like a bond ETF when volatility is high or the market declines. Utilizing a portfolio insurance strategy, it sets the previous month’s closing price as a 'monthly target defense line'-a kind of profit preservation target. The ETF is designed to minimize the possibility of returns falling below this defense line by monitoring the market daily and adjusting the allocation between equities and bonds (from 0% to 95%) throughout the month.

Because the allocation between equities and bonds is automatically adjusted according to market conditions, the equity proportion increases in bull markets, while the bond proportion rises in bear markets.

The equity portion invests in US-listed ETFs that track the Nasdaq 100, while the bond portion uses US short-term Treasury bond ETFs as safe assets. During the asset allocation process, Nasdaq 100 index futures are also partially utilized. Through this asset allocation and adjustment method, the ETF can limit losses during downturns and capture the growth potential of US tech stocks during upswings.

The clear difference in actual returns during correction phases has provided investors with a tangible 'defensive effect.' Its ability to offer both downside protection and upside participation, even while focusing on tech stocks, highlights its distinctiveness.

A representative from Kiwoom Asset Management stated, "In an environment where sharp declines and rebounds are repeated, 'limiting drawdowns' is the most important factor for long-term performance. The US Tech 100 Monthly Target Hedge ETF has clearly demonstrated its defensive structure during volatile periods, reaffirming that investors can invest steadily and comfortably even in turbulent markets."

The representative added, "The portfolio insurance strategy is a proven approach in both developed markets and academia, allowing investors to enjoy the upward trajectory of equity investments with volatility levels similar to long-term bonds. As an alternative to long-term bond investments, it offers both stable performance and the potential for monthly dividends."

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