KIM unveils 2x leveraged Vietnam ETF on KRX

Nov 25th, 2020 | By | Category: Alternatives / Multi-Asset

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Seoul-based Korea Investment Management (KIM) has partnered with index provider Bloomberg to launch a new ETF providing leveraged exposure to Vietnamese equities.

Vietnam equities

The ETF provides 2x leveraged exposure to Vietnam’s VN30 Index.

The KINDEX Vietnam VN30 Futures Leverage (H) ETF (368470 KS) has listed on Korea Exchange and comes with an expense ratio of 0.70%.

The fund provides a means for expressing a strongly bullish view on Vietnam’s continued economic growth which has outpaced most of its ASEAN peers in recent years.

Additionally, the ETF allows investors to bypass foreign investment limits on Vietnam’s equity and derivatives markets which is currently set at 49%.

Methodology

The fund provides twice the daily return on the Bloomberg VN30 Futures Index which references the performance of VN30 Index Futures, Vietnam’s first tradable stock index futures which launched in 2017.

By tracking VN30 Index Futures, the ETF will provide leveraged exposure to the price return on the futures contracts as well as the discount or premium obtained from rolling positions.

Currency risk between the Vietnamese dong and the Korean won is expected to be hedged on a regular basis.

The VN30 Index, which underlies the VN30 Index Futures contracts, is composed of 30 Vietnamese companies listed on the Ho Chi Minh Stock Exchange that have been selected in consideration of liquidity as well as market representability.

The index selects the 50 largest companies listed in Vietnam and, from that list, selects the 30 with the highest liquidity. Constituents are weighted by float-adjusted market capitalization with rebalancing occurring on a semi-annual basis.

As of the end of October, the VN30 Index had one-third (32.2%) of its exposure in banking stocks with real estate (19.1%), consumer staples (16.7%), and materials (7.6%) making up the next largest sector exposures. The largest constituents were Vietnam Dairy Products (9.7%), VinGroup (8.9%), Hoa Phat Group (7.6%), Vietnam Technological & Commercial JS Bank (7.1%), and Vietnam Prosperity Bank (5.5%).

Seongin Jeong, Head of ETFs at Korea Investment Management, commented, “We continue to see tremendous potential in the growing economy of Vietnam, driven largely by the country’s robust economic reforms, its role in the ASEAN’s supply chains and attractiveness for foreign direct investment, and the advanced development of its financial system. The launch of the KINDEX Vietnam VN30 Futures Leverage (H) ETF with the Bloomberg VN30 Futures Index as its benchmark is the start of our long-term partnership with one of the world’s top index providers. Bloomberg’s world class data, analytics, and index tools will help deepen our domestic ETF market and service increasingly sophisticated Korean investors.”

“We are excited to support the launch of this unique and exciting product for Korean investors,” added Ji Zhuang, APAC Head of Indices at Bloomberg. “Bloomberg has a strong track-record supporting some of the region’s largest fixed income ETF products and we look forward to further tailoring and expanding our multi-asset class index offerings for this fast-growing region.”

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