Four of the top five exchange-traded funds (ETFs) with the highest recent returns turned out to be active ETFs. In particular, ETFs that aggressively increased their weights in ABL Bio, whose share price surged, performed well. Unlike plain ETFs that track indexes, active ETFs allow managers to actively adjust portfolio weights.
According to the Korea Exchange (KRX) on the 22nd, four of the five exchange-traded funds (ETFs) that rose the most over the past week (Nov. 12–20) were active ETFs. Even when expanding the period to the past month (Oct. 20–Nov. 20), three of the top five ETFs with the highest gains were bio-related active ETFs.
The product that rose the most during the week was Samsung Active Asset Management's "KoAct Bio Healthcare Active ETF (fluctuation rate 19.87%)." It was followed by TIMEFOLIO Asset Management's "TIMEFOLIO K-Bio Active ETF (19.47%)" and NH-Amundi Asset Management's "HANARO Bio Korea Active ETF (16.12%)," which also posted double-digit gains.
Active ETFs themed around the bio sector ranked high in returns largely thanks to ABL Bio, whose share price jumped. Among the constituents of the KoAct Bio Healthcare Active, TIMEFOLIO K-Bio Active, and HANARO Bio Korea Active ETFs, ABL Bio had the highest portfolio weight.
ABL Bio's share price surged after it released that it had signed a technology transfer deal worth 3 trillion won with global pharmaceutical company Eli Lilly. ABL Bio hit the upper price limit twice on the 12th and 13th, lifting the stock 83% over the past eight trading days.
Sim Ju-hyeon, a manager at Samsung Active Asset Management who runs the KoAct Bio Healthcare Active ETF, said, "ABL Bio explained in detail about the BBB shuttle, bispecific antibodies, and cholangiocarcinoma at a briefing in January," and noted, "We evaluated this positively and began increasing our investment weight early in the year."
In particular, Sim bought additional shares in June, when ABL Bio's stock fell. At the time, the market was concerned that the stock would drop due to the impact of 140 billion won in convertible preferred shares issued last year.
In addition, unlike index ETFs, active ETFs can invest preemptively in corporations whose share prices are more likely to rise "going forward" rather than those whose prices are rising "now." If the manager's judgment is accurate, the investment return can be higher.
Lee Jeong-uk, Director General of TIMEFOLIO's ETF Management Division, who manages the TIMEFOLIO K-Bio Active ETF, said, "Index ETFs inevitably have lower weights in corporations that are growing the fastest right now," and explained, "Active ETFs, by contrast, can hold rapidly growing corporations at high weights, which can lead to strong performance."
For example, index ETFs that invest in the bio sector hold the most Samsung Biologics and Celltrion, which have large market capitalizations, but have smaller weights in Alteogen or ABL Bio, whose share prices have recently surged. That is because the market caps of Alteogen and ABL Bio are around 29 trillion won and 10 trillion won, respectively, far short of Samsung Biologics (87 trillion won) or Celltrion (43 trillion won).
Meanwhile, Korea Investment Value Asset Management's "VITA MZ Consumption Active ETF (13.92%)" posted a sharp rise thanks to aggressive investments in hotel and cosmetics stocks expected to benefit from improved middle–Japan relations.