Babel Portfolio Embraces Semiconductor and AI Themes for Future Growth

Key Takeaways

The KODEX AI Semiconductor ETF leads domestic semiconductor investments, boasting a 65.34% return this year.
Hana Asset Management’s 1Q K Sovereign AI, the first of its kind in Korea, focuses on AI technology development by sovereign entities.
Shinhan’s SOL Korea High Dividend ETF targets companies with strong dividend growth, while TIGER Total World Stock Active offers diversified exposure to global markets.

Emerging Trends in ETFs

The ETF landscape in Korea is evolving, showcasing a focus on semiconductor and AI themes as well as dividend stocks, with several products launched recently. Samsung Asset Management’s KODEX AI Semiconductor is currently the top performer among domestic semiconductor ETFs, showing an impressive 65.34% return since the start of the year.

KODEX AI Semiconductor invests in key players in the artificial intelligence semiconductor space, including companies involved in high bandwidth memory (HBM), 5G, autonomous driving, and the Internet of Things (IoT). Notably, leading stocks like Samsung Electronics and SK Hynix make up approximately 47% of the ETF’s holdings as of September.

Another significant newcomer is Hana Asset Management’s 1Q K Sovereign AI, which debuted at the end of last month as Korea’s first ETF focused specifically on Sovereign AI. This investment theme revolves around countries or institutions creating independent AI technologies using their unique data, infrastructure, and workforce. The 1Q K Sovereign AI ETF heavily invests in local AI-related stocks, with Naver and Kakao comprising 55% of its portfolio, aligning with government efforts to elevate the nation’s AI capabilities.

Additionally, Shinhan Asset Management has introduced the SOL Korea High Dividend ETF, launched recently to identify companies exhibiting healthy dividend growth. This ETF distinguishes itself by not simply ranking stocks based on dividend yield; instead, it includes firms that offer dividend reductions as well as those with strong stock buyback programs, reflecting current market dynamics.

For investors looking beyond domestic borders, the TIGER Total World Stock Active ETF offers an avenue to invest in 48 global markets, balancing U.S. and non-U.S. stock allocations at 60% and 40% respectively. This fund aims to mitigate concerns surrounding the peak valuations of U.S. equities by providing diversified exposure.

These emerging ETFs signal a trend toward specialized investment products that align with both domestic policies and global market conditions. Navigating these options may provide investors with unique opportunities amidst shifting financial landscapes.

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