With Samsung Electronics and SK hynix, the "two semiconductor leaders," expected to post record results in the first quarter of this year, the semiconductor weight in domestic active exchange-traded funds (ETFs) is expanding quickly.
In particular, even ETFs with themes relatively less related to semiconductors or artificial intelligence (AI) are increasing their allocations to large-cap semiconductor stocks. As market attention has concentrated on large caps such as semiconductors, ETFs in neglected themes appear to have boosted their semiconductor weights in pursuit of returns.
According to Koscom ETF CHECK on the 15th, the SK hynix weight among holdings of the "KODEX 200 Active" ETF surpassed 20% for the first time since listing. In addition, the weight of the "two semiconductor leaders" is growing among the components of active ETF products that use the KOSPI index or KOSPI 200 index as their benchmarks, such as "1Q 200 Active" and "TIME KOSPI Active."
As the combined market capitalization of Samsung Electronics and SK hynix accounts for more than 40% of the total market capitalization of the KOSPI, the weights of the two stocks have also increased within the compositions of these ETFs that use the KOSPI index and KOSPI 200 index as their benchmarks.
Unlike passive funds that track an index as is, active ETFs allow managers to directly select stocks and set allocation weights, but under the Financial Investment Services and Capital Markets Act they are required to maintain a correlation coefficient of at least 0.7, meaning they must track at least 70% of the benchmark.
That said, a trend of expanding weights for the two semiconductor leaders is also being observed in active ETF products such as ESG (environment, social and governance) and Metaverse, where there is no obligation to increase the weights of Samsung Electronics and SK hynix. As a result, the gap between the benchmark index and ETF holdings is widening.
Looking at the holdings of the "BNK Shareholder Value Active" ETF, as of the 14th, Samsung Electronics (14.92%) and SK hynix (13.40%) ranked first and second by weight. This contrasts with the ETF's benchmark, the "FnGuide Shareholder Value Index," whose top components include Krafton, Shinhan Financial Group and Meritz Financial Group.
In Morgan Stanley Capital International's (MSCI) "ACE ESG Active" ETF, Samsung Electronics (22.83%) and SK hynix (13.75%) ranked first and second by component weight, respectively, while the benchmark "MSCI Korea Country ESG Leaders Custom Capped Index" had SK hynix (25.6%) and KB Financial Group (7.04%) as the top two as of the 31st of last month.
The "KODEX Metaverse Active" ETF, introduced as an ETF composed of representative domestic Metaverse stocks, had SK hynix and Samsung Electronics at a combined around 10% in the benchmark "FnGuide K-Metaverse" index, but their combined weight within the ETF was 16%, meaning it held significantly more than the benchmark.
The reason Samsung Electronics and SK hynix weights are rising even in active ETFs not directly related to semiconductors, such as ESG or Metaverse, is performance. An official at an asset management company said, "Active ETFs allow managers to choose stocks freely as long as they keep the correlation coefficient at 0.7," adding, "Whether 'Samjeon-nix' is in the portfolio makes a big difference in results, so they are included for returns."
In fact, the "BNK Shareholder Value Active" ETF's return has risen 6.39% from the start of this month to now. Returns for the "ACE ESG Active" and "KODEX Metaverse Active" ETFs also climbed 13.29% and 3.63%, respectively, over the same period.
However, criticism is being raised about ETF compositions that do not match their themes. Another official in the asset management industry said, "While pursuing returns is important, increasing the weight of stocks that do not fit the theme can confuse investors."
An official at the Korea Exchange (KRX) said, "Because active ETFs aim to generate excess returns versus their benchmarks by nature, they can adopt strategies with different holdings," but added, "While we cannot sanction each firm's strategy, if a strategy strays too far from the original intent of ETFs, we can take a closer look."