Korea Investment Management said on the 26th that it changed the name of the "ACE Fn5G Plus" exchange-traded fund (ETF) to the "ACE Korea AI Tech Core Industry" ETF.
The "ACE Korea AI Tech Core Industry" ETF was listed in Apr. 2021 as the "ACE Fn5G Plus" ETF. It invests across the network convergence industry, and to highlight the product's strengths, the representative keyword of that industry at the time, "5G," was included in the name when it was listed.
However, the relisting with a new name was carried out to increase the intuitiveness of the ETF's investment destination. As the representative keyword for the current investment destination has shifted to "artificial intelligence (AI)," investors could feel a disconnect between the product name and the ETF portfolio.
To align with the constituents, the underlying index name changed from "FnGuide 5G Plus Index" to "Fn Korea AI Tech Core Industry Index," and the product name changed from "ACE Fn5G Plus" to "ACE Korea AI Tech Core Industry."
The composition of the constituents was also changed. Previously up to 30 stocks were included, but with the name change the number of constituents was reduced to 15. Korea Investment Management said it also expanded the cap on an individual stock's weight from 8% to 20%, adopting a methodology that allows concentrated investment in selected names.
Financial requirements, one of the main indicators for stock selection, were also strengthened. Previously, stocks with a market capitalization of less than 200 billion won on the selection date were excluded from the constituents, but by changing the index calculation criteria, the market cap threshold was raised to 500 billion won. To be included in the portfolio, companies must meet stronger financial soundness than before.
An upper limit on the weight of individual sectors was also added. As a measure to differentiate it from domestically listed semiconductor ETFs, the semiconductor sector weight in the ACE Korea AI Tech Core Industry ETF is limited to 15%.
Nam Yong-su, head of ETF management at Korea Investment Management, said, "We determined that the keyword '5G' no longer represents the investment destination, so we changed the index and product name to improve investment intuitiveness," and noted, "During the relisting process, we raised the average market cap threshold to reduce small-cap risk, and to clarify the investment character of the ACE Korea AI Tech Core Industry ETF, we placed limits on the number of constituents and the sectors included."