Hanhwa Investment & Securities "Two ACE ETFs Including Nvidia Rank Top in 1-Year Returns by Category"

by Ryu Hyunseok

Published 19 Jan.2024 10:04(KST)

Korea Investment Trust Management announced on the 19th that two ACE ETFs containing Nvidia ranked among the top in 1-year returns in their respective categories. The ETFs in question are the ACE Nvidia Bond Mixed Bloomberg ETF and the ACE Global Semiconductor TOP4 PLUS SOLACTIVE ETF.

According to the Korea Exchange on the 18th, the ACE Nvidia Bond Mixed Bloomberg ETF posted a 1-year return of 55.01%, ranking first among single-stock ETFs. This figure overwhelmingly surpasses the average return of domestic single-stock ETFs (24.75%). The ETF's recent 3-month and 6-month returns (9.32%, 9.78%) also exceeded the averages (2.80%, 1.76%).

The ACE Nvidia Bond Mixed Bloomberg ETF holds Nvidia at 33.82%, the largest weighting of Nvidia among domestic ETFs. Approximately 70% of the fund is invested in stable domestic bonds. The domestic bonds were selected based on criteria including ▲credit rating of AA- or higher ▲issuance balance of 500 billion KRW or more ▲short remaining maturity (government bonds between 1 month and less than 2 years, monetary stabilization bonds between 1 year and less than 2 years). Due to the high bond allocation, investment is possible up to 100% in retirement pension (DC/IRP) accounts.

The ACE Global Semiconductor TOP4 PLUS SOLACTIVE ETF recorded a 1-year return of 64.54%, ranking second among domestically listed semiconductor ETFs over 1 year (excluding leveraged ETFs). Its recent 3-month and 6-month returns (15.63%, 10.70%) also surpassed the averages (10.28%, 4.43%). Nvidia’s weighting is 21.71%, the third highest among domestic ETFs. This reflects the ETF’s characteristic of selecting leading companies with strong market dominance in the four major semiconductor sectors (memory, non-memory, semiconductor equipment, foundry) and investing evenly at 20% each. Currently, the ACE Global Semiconductor TOP4 PLUS SOLACTIVE ETF includes Nvidia as well as ▲ASML (20.25%) ▲TSMC (19.86%) ▲Samsung Electronics (16.77%).

Thanks to the rapid growth of the semiconductor industry, this ETF ranked third in total domestic ETF returns in 2023 (excluding leveraged ETFs). When investing through individual pension accounts, investors can benefit from tax credits and tax deferral effects while investing in the growth of the semiconductor industry, including Nvidia.

Besides these two products, other ACE ETFs containing Nvidia include the ACE US Stock Bestseller ETF, ACE US Big Tech TOP7 Plus ETF, and ACE Tesla Value Chain Active ETF.

Nam Yong-su, Head of ETF Management at Korea Investment Trust Management, stated, “As companies compete to adopt artificial intelligence (AI), Nvidia’s graphics processing units (GPUs) have established themselves as essential items for AI adoption.” He added, “Especially with the next-generation AI chip (B100) scheduled for release this year, which is expected to outperform existing products significantly and come with a price increase, the projected earnings per share (EPS) over the next 12 months is rising sharply.” He continued, “The advantage is that by investing through retirement and individual pension accounts, investors can invest in a growing industry while also receiving tax credit benefits.”