Mirae launches Korean renewable energy ETF on KRX

Mar 5th, 2021 | By | Category: Equities

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Mirae Asset Global Investments has launched a new ETF in South Korea under its local Tiger ETF brand.

Mirae launches Korean renewable energy ETF on KRX

The fund provides exposure to Korean companies involved in renewable energy activities.

The Tiger Fn Renewable Energy ETF (377990 KS) delivers exposure to Korean companies aligned with the renewable energy investment theme.

It provides targeted access to firms that are expected to benefit from South Korea’s efforts to transition towards a low-carbon economy through the government’s Green New Deal initiative.

The fund has listed on Korea Exchange (KRX) and comes with an expense ratio of 0.50%.

The ETF is linked to the FnGuide Renewable Energy Index which selects stocks from the universe of common shares listed on the KOSPI and KOSDAQ segments of KRX.

The index first applies size, liquidity, and quality screens which remove companies with market capitalizations under 100 billion won (approx. $90 million), those in the lowest 10% when ranked by average daily trading volume, and those with current ratios (a measure of a firm’s ability to pay short-term obligations) below 10%.

The methodology then assigns each company a score reflecting its alignment with the renewable energy theme. The process harnesses text mining technology to determine the frequency of renewable energy keywords in company reports and documents.

Examples of keywords include hydrogen energy, solar energy, wind energy, bioenergy, geothermal energy, marine energy, and hydro energy.

The index selects 40 stocks with the highest thematic scores. Constituents are weighted by float-adjusted market capitalization, and the index is reconstituted and rebalanced semi-annually in May and November.

The resulting index is highly concentrated with the top five positions accounting for half of the total index weight: OCI (18.3%), Hanwha Solutions (11.1%), Doosan Fuel Cell (10.6%), CS Wind (9.9%), and LS (9.6%).

Two-thirds of the allocation is currently in mid-cap stocks with the remaining weight distributed approximately equally between large-caps and small-caps.

Stocks from the materials (32.3%), industrials (25.0%), energy (22.2%), and information technology (17.7%) sectors dominate.

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