Samsung AM launches three ETFs on Korea Exchange

Sep 10th, 2018 | By | Category: Alternatives / Multi-Asset

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Samsung Asset Management has launched three new ETFs on Korea Exchange. Listed under the firm’s KODEX brand, two of the funds provide exposure to futures contracts based on long-term Treasury bonds (one long, one short), while the third tracks local companies involved in rechargeable battery production.

Samsung AM launches three ETFs on Korea Exchange

Samsung Asset Management has listed three new ETFs on Korea Exchange under the firm’s KODEX brand.

Samsung Asset Management is based Hong Kong and an affiliate of Seoul-headquartered Samsung Group.

Treasury Bonds

The Samsung KODEX Ultra T-bond Futures H ETF (304660 KS) tracks the S&P Ultra T-Bond Futures Index which consists of the nearest maturity Ultra T-Bond futures contract.

The key feature distinguishing the Ultra T-Bond from the existing T-Bond futures contract is the different range of deliverable securities. The deliverable basket for Ultra T-Bond futures comprises cash Treasury bonds with at least 25 years remaining to maturity.

By comparison, deliverable securities for the existing T-Bond contract are bonds with remaining maturities between 15 and 25 years.

Ultra T-Bond futures and T-Bond futures are identical in terms of their notional value, minimum tick size, contract critical dates, and notional coupon. According to CME Group, the Ultra T-Bond futures contract is the fastest growing interest rate futures product ever introduced by the exchange.

The new ETF trades in Korean won and incorporates a currency-hedging strategy. It comes with an expense ratio of 0.30%. Dividends are paid annually.

The Samsung KODEX Ultra T-bond Futures Inverse H ETF (304670 KS) provides the inverse daily return on the above index. It also trades in Korean won and utilizes currency hedging. Its expense ratio is also 0.30%.

Thematic battery exposure

The Samsung KODEX Secondary Battery Industry ETF (305720) tracks the FnGuide Secondary Battery Industry Index which consists of South Korean equities, drawn from either the KOSPI (large-cap) or KOSDAQ (medium and small-cap) trading markets, that are related to the theme of rechargeable battery production.

Eligible firms for the index can take part in any stage of the value chain, from producing raw materials, chemicals, parts or equipment to managing the manufacturing process. The methodology searches for the use of certain keywords within company documents to assign an exposure score to each company.

Those with less than 10% exposure or with market capitalizations less than 50 billion Korean won are excluded.

Stocks are weighted using a combination of free float-adjusted market capitalization and exposure to the underlying theme. Those with larger market caps and a greater degree of exposure are assigned larger weights in the index. The largest stock is capped at 20% and all other stocks are capped at 15%.

The ETF trades in Korean won and comes with an expense ratio of 0.45%. Dividends are paid quarterly to investors.

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