Hanwha Asset Management said on the 28th it will cut the total expense ratio for "PLUS U.S. S&P 500" and "PLUS U.S. S&P 500 (H)," which track the U.S. Standard & Poor's (S&P) 500 index, to 0.0062% per year each.
For the currency-exposed PLUS U.S. S&P 500, the total expense ratio will be reduced from 0.0700% per year, and for the currency-hedged PLUS U.S. S&P 500 (H), it will be reduced from 0.3000% per year. The management fee for both products will be adjusted to 0.0001%. The designated participant fee is 0.0001%, and the trust fee and administrative service fee are 0.0050% and 0.0010%, respectively.
Based on a simple calculation of the total expense ratio alone, if you invest 10 million won for one year, the annual expense for the currency-exposed product falls from 7,000 won to 620 won. The currency-hedged product drops from 30,000 won to 620 won.
Typically, currency-hedged ETFs incur additional expense in the process of reducing exchange-rate risk, so their fees are set higher than currency-exposed products. Hanwha Asset Management said it matched the expense levels of the two products through this cut.
Accordingly, investors can choose a product based on their exchange-rate outlook and investment objective rather than expense differences. If you expect the won-dollar rate to rise or seek to diversify a portfolio with dollar assets, the currency-exposed product is relatively advantageous. Conversely, if you expect the won to strengthen or want to reduce the impact of exchange-rate movements and track only the S&P 500 index, you can use the currency-hedged product.
Hanwha Asset Management explained it decided to lower fees in light of rising long-term, periodic investment demand for the U.S. benchmark index as the S&P 500 index continues its record high streak.
Kim Jeong-seop, head of the ETF Business Division at Hanwha Asset Management, said, "We cannot predict index direction, but expense is a variable investors can clearly control," adding, "We made it possible for customers seeking long-term, periodic investments in the U.S. benchmark index to choose products under the same expense conditions regardless of whether they hedge."