Kiwoom launches mid- and small-cap smart beta ETF on KRX

Aug 14th, 2019 | By | Category: Equities

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Seoul-based Kiwoom Asset Management has launched the Kiwoom KOSEF Fn Mid Small Cap ETF (331910 KS) on the Korea Exchange.

Kiwoom launches mid and small-cap smart beta ETF on KRX

The fund provides exposure to 100 mid- and small-cap Korean firms with strong quality characteristics.

The fund is linked to the FnGuide-KWAM Smart Mid Small Cap Index, providing smart beta exposure to quality mid and small-cap firms listed in South Korea.

The index selects its constituents from a universe South Korean common stocks.

The methodology first excludes the 50 largest stocks by market capitalization as well as those with market capitalizations below 40 billion won (approx. $33 million) or with free floats less than 10%.

The remaining constituents are then graded according to eight metrics related to the quality factor.

Firms receive a point for each of the following accounting metrics it satisfies: return on assets greater than zero, return on assets greater than the previous quarter, current cash flow positive, current cash flow greater than net profit, long-term debt to assets lower than the previous quarter, current ratio higher than the previous quarter, inventory less than the previous quarter, gross profit margin higher than the previous quarter, and total asset turnover in the current quarter cumulative.

The index selects 100 stocks starting with those with the highest scores. When choosing the final constituents, if stocks have the same scores, the methodology favours those firms with the lowest EV/EBITDA ratios (enterprise value/earnings before interest, taxes, depreciation, and amortization).

Constituents are equally weighted, and the index is reconstituted and rebalanced on a quarterly basis.

The fund comes with an expense ratio of 0.30%.

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