Concentrated investment in 10 market leaders plus short-term bonds... Samsung Active lists hybrid ETF

[Financial News] A hybrid exchange-traded fund (ETF) has been launched that combines concentrated investments in the top market-cap stocks driving South Korea’s stock market with short-term bonds to reduce volatility.
Samsung Active Asset Management said on the 27th that it had newly listed the “KoAct Korea TOP5 Plus Bond Balanced 50 Active ETF.”
The fund makes concentrated investments in up to 10 stocks, focusing on the five largest by market capitalization and including candidates with the potential to rise into the top tier. The remainder is invested in high-quality domestic short-term bonds and other assets to seek interest income.
It reflects the recent increase in the concentration of investment in large-cap stocks and the widening gap in returns among individual stocks in the domestic market. According to FnGuide, as of the end of September, the five largest stocks by market capitalization on the KOSPI Composite Index accounted for 58.9% of the total, while the top 10 accounted for 64.5%.
Performance also varied widely among the top stocks. Among the 100 largest stocks by market capitalization, the gap between the top 20% and bottom 20% by return reached 199.2 percentage points in the third quarter of this year. During the same period, while the KOSPI Composite Index rose 62.3%, Samsung Electro-Mechanics gained 493.3%, SK Square 209.5%, SK hynix 172.8% and Samsung Electronics Co., Ltd. 123.9%.
The equity portion selects stocks based on changes in industrial structure and the potential for improved earnings. The bond portion is managed to maintain an average duration of around one year, a strategy that reduces its price sensitivity to interest-rate fluctuations compared with long-term bonds.
Classified as a safe asset for retirement pension accounts (DC and IRP), the fund can be invested in at a 100% allocation through retirement and personal pension accounts and individual savings accounts (ISAs).
Kang Dong-uk, a manager in the Investment Division 1 at Samsung Active Asset Management, said, “We will strive to provide individual and pension investors with steady excess returns by making concentrated investments in the key stocks with the largest market capitalizations that lead the South Korean market and combining them with stable domestic short-term bonds.” 

[email protected] Bae Han-geul Reporter