Samsung Asset Management promoted its exchange-traded fund (ETF) in a way that suggested investors could receive additional dividends, but ultimately removed the wording after a warning from the Korea Financial Investment Association.
According to the financial investment industry on the 25th, Samsung Asset Management advertised that it would support additional dividends on top of the existing dividends for products such as 'KODEX U.S. S&P 500'. It specified the additional dividend yield available for those who purchase the product before the dividend payment date.
These products had been operated under an automatic reinvestment (TR, total return) method until now. However, following an amendment to the Income Tax Act announced by the Ministry of Economy and Finance earlier this year which banned overseas stock-type TR ETFs, Samsung Asset Management changed the TR products to products (PR) that conduct quarterly dividends at the end of January, April, July, and October.
Samsung Asset Management indicated that it would distribute the dividends accumulated over 15 quarters until last year for the 'KODEX U.S. S&P 500' and 'KODEX U.S. Nasdaq 100' ETFs, which had been operated under the TR method since their listing in 2021, as dividends over 15 quarters by January 2029.
The problem lies in the promotion that offered the previously reinvested dividends as 'additional dividends.' The reinvested reserved dividends had already been factored into the price of the ETFs purchased by investors, so for new investors buying the ETFs, it is merely a refund of a portion of the amount included in the purchase price.
The Korea Financial Investment Association judged that such advertising could mislead many investors into thinking that additional dividends exist that provide economic benefits. Consequently, after receiving a warning from the Korea Financial Investment Association, Samsung Asset Management recently removed the wording of 'additional dividends' from its website and YouTube.