The KOSDAQ active exchange-traded fund (ETF) that drew investors' hopes early after listing has sunk into the red after taking a direct hit from a string of domestic and external headwinds, including recent geopolitical risks and the Sam Chun Dang Pharm shock. To defend performance from sliding with no clear bottom, asset managers are throwing everything into portfolio rebalancing. In particular, one product from Timefolio Asset Management has responded nimbly to the extreme volatility, swapping its No. 1 weighted stock six times recently.
As of the 20th, the top-weighted stock in the TIME KOSDAQ Active ETF from Timefolio Asset Management is VITZRO CELL. VITZRO CELL produces primary lithium batteries and mainly supplies products for military and industrial uses.
In the case of the TIME KOSDAQ Active ETF, the top-weighted stock within the ETF changed six times over 29 trading days after listing. For the first four trading days right after listing, EcoPro held the top weight, but it then shifted in order to ABL Bio, Sam Chun Dang Pharm, ABL Bio again, ISC, SILICON2, and VITZRO CELL.
That contrasts with the KoAct KOSDAQ Active ETF from Samsung Active Asset Management, which listed on the same day. On the listing day, on the 10th of last month, Qurient held the top weight for just one day, and since then Sungho Electronics has steadily kept the No. 1 spot.
Timefolio Asset Management initially built its portfolio around large-cap stocks to minimize market shock early after listing, but it is seen to have subsequently tried to rotate leadership into biopharma. More recently, it has turned its sights broadly to semiconductor components and cosmetics materials corporations to cope with the volatile market.
A Timefolio Asset Management official said, "Recently, we are considering leading stocks mainly among corporations with strong earnings and among materials, parts, and equipment companies."
KOSDAQ active ETFs drew investors' attention at listing but have struggled to beat the KOSDAQ index. From the 10th of last month through today, the KOSDAQ index rose 3.27%, but these products' returns instead fell.
For the KoAct KOSDAQ Active ETF, returns were in the 1%–2% range early after listing, but on the 7th returns fell to -17.95%. However, after succeeding in reducing losses, returns have climbed to -4.61% as of today.
For the TIME KOSDAQ Active ETF, returns have remained negative since listing. Likewise, after marking a low of -19.24% on the 7th, returns have been gradually improving, but it still shows little sign of a rebound, posting -11.68% today.
The problem is that frequent rebalancing to protect returns can instead backfire. Some note that if stocks are switched often, trading costs rise and can be passed straight on to investors as other expenses.
However, an asset management industry official said, "For active ETFs, other expenses that occur are already embedded in the total fee."