DS Asset Management on the 10th formally declared its entry into the exchange-traded fund (ETF) market. DS Asset Management plans to list its first ETF, "DS KOSDAQ Active ETF," on the 14th.
That morning, DS Asset Management held a press briefing at the Korea Exchange (KRX) conference hall and introduced DS KOSDAQ Active ETF, the first ETF it is bringing to market. The product is an active ETF that concentrates on leaders within structurally growing industries on the KOSDAQ market.
Chief Executive Kim Seong-hun of DS Asset Management said, "To differentiate from existing active ETFs, we will mobilize all our in-house capabilities—such as DS Asset Management's research strength and performance in leading stocks—so this can become an excellent option for investors."
Chief Investment Officer Hyeon Sang-gyun of DS Asset Management said, "Regardless of corporations' fundamental value, allocating assets by market-cap weight keeps a fund from fully reflecting a corporation's valuation," adding, "DS Asset Management, which identifies corporate value and sensitively reflects changes in corporate fundamentals over time, will be able to respond for clients."
DS Asset Management emphasized that the KOSDAQ market is where the company's strengths can be best exercised. The KOSDAQ market has more than 1,800 listed companies, but institutional research is insufficient, making it a market with significant information asymmetry. It said that, as a result, the ability to analyze corporations translates directly into performance differences.
Founded in 2008, DS Asset Management employs a strategy that invests across the entire growth cycle of corporations, from discovering unlisted early-stage firms through post-listing. Using the databases it has tracked since the unlisted stage, the firm aims to select corporations on the KOSDAQ with high growth potential.
Director Jeong Seong-in of DS Asset Management's ETF team said, "With the KOSDAQ 150 index, you can cover only about 60% of the KOSDAQ market's total market cap," adding, "Conversely, our strategy is that we can fully seek alpha within the remaining 40% that the headline index does not capture."
Jeong added, "Within the KOSDAQ 150, about 86% of the corporations have a market cap of at least 1 trillion won, but our ETF is expected to be below 40%," saying, "There is a very high possibility that corporations with a KOSDAQ market cap under 1 trillion won will account for more than 60% of the portfolio."
Regarding the KOSDAQ market, which has been fluctuating around the 800 level recently, the outlook was assessed as having room to turn positive going forward.
Jeong said, "In the KOSDAQ market recently, earnings growth is becoming visible for corporations in semiconductor components and materials," adding, "On top of that, with the government's strong policies such as expelling insolvent corporations and introducing a promotion and relegation system, and with expected inflows of institutional funds following benchmark changes, now is a good entry point."
The management fee for the DS KOSDAQ Active ETF has been set at 1.00% per year (100 bp). Although this is the highest level in the industry, the firm said it would make up for it with performance.
The ETF brand slogan is "Start real active." Instead of churning out products that chase trendy themes, it aims for management that is based on research-driven stock selection, flexible responses to market changes, and clear explanations to investors of the basis for management decisions.
To that end, it said it will also operate scientific management and investor communication programs such as an artificial intelligence (AI)-based management and analysis system, an AI daily management report, and rebalancing reviews.