Korea Investment Management said on the 30th it will launch the "Korea Investment K-Index & Theme Rotation Fund," which invests in themes that beat Korea's benchmark index.
The fund builds a portfolio by selecting K-growth theme exchange-traded funds (ETFs) that outperform the market through a momentum strategy. A momentum strategy is a trend-following strategy that seeks revenue by continuously buying (or selling) stocks that have risen (or fallen) over a certain period.
The K-growth themes that make up the investment universe are selected based on government official data and internal research. The current universe includes high-growth industries such as ▲ artificial intelligence (AI) ▲ semiconductors ▲ secondary batteries ▲ robots ▲ defense ▲ shipbuilding ▲ renewable energy ▲ biotech ▲ content. According to Bloomberg and Korea Investment Management, the themes included in the universe have actually outperformed the KOSPI 200 index by 100% to 706% over the past 10 years.
The fund has an operating structure that reflects long- and short-term momentum in stages. First, it selects relatively strong themes by comparing each theme's long-term momentum, measured with a long-term momentum indicator, to the market index. It then adds qualitative analysis to select growth ETFs with confirmed "momentum" that beat the market and invests an initial 4%.
It then adjusts weights using a short-term momentum indicator. By comparing the short-term momentum of K-theme ETFs with the short-term momentum of the market index, it invests an additional 4% in K-theme ETFs with relatively higher short-term momentum, increasing the allocation up to 8%.
Through Korea Investment Management's proprietary momentum strategy, the fund aims to concentrate on themes expected to have strong growth potential and to beat the market index.
Cha Hye-min, lead manager and head of global quant management at Korea Investment Management, said, "The Korea Investment K-Index & Theme Rotation Fund is an investment product that can complement the limits of products focused on a single theme," adding, "Through a rotation strategy between indices and themes, we seek a product that adapts to various market environments and pursues revenue potential."