CT Investments debuts K-pop thematic ETF

Sep 6th, 2022 | By | Category: Equities

Seoul-based CT Investments has launched a niche thematic equity ETF in the US providing exposure to Korean entertainment and interactive media companies involved in Korean popular music, also known as K-pop.

CT Investments debuts K-pop thematic ETF on NYSE

K-pop has become a global phenomenon over the past decade.

The KPOP and Korean Entertainment ETF (KPOP US) has been listed on NYSE Arca with an expense ratio of 0.75%.

The fund has come to market in partnership with white-label ETF issuer Exchange Traded Concepts.

K-pop has become a global phenomenon over the past decade with international music record sales from Korean entertainment companies reaching $221 million in 2021, up from just $24m in 2012.

Notably, a significant portion of this growth has come from some of the world’s largest music markets in North America and Europe, reinforcing the trend of K-pop resonating with mainstream culture.

Jangwon Lee, CEO of CT Investments, said: “K-pop, which has become a global keyword, has become part of mainstream culture for fans in Korea as well as around the world. We are launching this ETF to provide an opportunity for global fans who love K-pop to participate in the potential growth and development of the K-pop industry, as well as provide investors with access to Korea-listed companies that are driving the future of the global content industry forward.

“The global market for K-pop is still at an early stage of growth, and the KPOP and Korean Entertainment ETF offers thematic exposure to key companies in the Korean entertainment and media industry that stand to benefit from this secular trend.”

Methodology

The fund is linked to the KPOP Index which selects its constituents from a universe of stocks listed on Korea Exchange with market capitalizations above 100 billion Korean won (approx. $70m).

The index harnesses a natural language processing algorithm that analyzes companies’ text-based documents to identify firms with relevant keywords associated with business activities linked to the K-pop theme.

The index targets the inclusion of 30 stocks, first selecting the largest five companies classified within the entertainment industry and the largest two firms classified within the interactive media industry. It then selects the remaining companies by choosing those with the highest thematic relevance scores from the screened universe.

Constituents are weighted by float-adjusted market capitalization while targeting an aggregate weight of 70% – 80% for all entertainment companies and 20% – 30% for interactive media firms. No single security may account for a weight greater than 9.85% at each quarterly rebalance.

As of the end of August, the index was highly concentrated in the largest constituents with the top five positions accounting for approximately half of the total weight – Hybe (10.3%), CJ E&N (10.0%), JYP Entertainment (9.8%), Naver (9.7%), and Kakao (9.6%).

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