Kiwoom Asset Management to List "KIWOOM US AI Tech High Beta ETF" on May 12

Application of Thematic High-Beta Strategy

Kiwoom Asset Management announced on May 8 that it will list the "KIWOOM US AI Tech High Beta" Exchange Traded Fund (ETF), which invests in high-growth potential U.S. innovative technology companies, on May 12.

According to Kiwoom Asset Management, this product is designed to continuously reflect innovative technology companies that are actually drawing attention in the market. This addresses the limitations of existing thematic ETFs, which typically select stocks based on static industry classifications or keywords, making it difficult to promptly respond to rapidly changing market trends.

To achieve this, Kiwoom Asset Management applied a "thematic high-beta strategy," in which it analyzes keywords using large language models (LLM) to select companies related to artificial intelligence (AI) and frontier technologies, and then invests in the top 30 stocks with the highest beta values.

High-beta is a strategy that invests in stocks with higher volatility and greater upward momentum compared to the overall market. A higher beta value indicates greater sensitivity to market fluctuations, and such stocks generally offer higher return potential during bull markets.

The KIWOOM US AI Tech High Beta ETF utilizes these high-beta characteristics to select innovative technology leaders that attract significant market attention. By diversifying investments across 30 stocks, it is designed to mitigate individual stock concentration risk. Furthermore, the ETF aims to combine the market responsiveness of active ETFs with the transparency of passive ETFs.

The weighting of each constituent stock is determined by applying a method that reflects both market capitalization and beta equally at 50% each, thereby taking into account both market influence and volatility. Additionally, the ETF limits the weight of any single stock to a maximum of 10% to prevent over-concentration and to ensure balanced investment across various innovative technology themes.

The portfolio is evenly composed of diverse innovative technology themes currently attracting market attention, such as AI semiconductors, data centers, optical communications, and space technology.

In particular, by rebalancing the portfolio quarterly, the fund can continuously discover new innovative technology companies and adapt to changing investment trends, thus addressing the risks of theme expiration and marginalization that have been cited as limitations of single-theme ETFs.

Additionally, although this product is a passive ETF with high-risk and high-return characteristics, unlike active strategies that depend on the judgment of fund managers, it selects stocks based on quantitative rules, thereby maintaining the transparency and consistency unique to ETFs.

Kyungjun Lee, Head of ETF Management at Kiwoom Asset Management, stated, “Since innovative technology themes tend to change rapidly, it is important to invest in line with evolving trends rather than sticking to a specific theme. This ETF will serve as a means for investors to diversify across market-leading stocks in an environment where it is difficult to select individual stocks.”

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