[Practical Finance] Theme ETFs Gaining Attention Amid 'Weak Stock Market'

Unique Theme ETFs in Spotlight
Metaverse, Carbon Emission Permits, and More

[Asia Economy Reporter Junho Hwang] As the KOSPI falls into the 2900s, a variety of unique themed exchange-traded funds (ETFs) and funds are being launched one after another for retail investors who have lost their way. These products are composed of themes that even stock beginners (Joorini) might have heard of at least once. Funds managed by experts can be traded as easily as stocks, and their returns are holding up well, gaining popularity through word of mouth.

The most emerging theme recently is the metaverse, which enables various activities linked to reality through avatars, digital representations of oneself in virtual space. With the establishment of non-face-to-face culture due to COVID-19, the metaverse industry is emerging as a promising next-generation industry. According to global consulting firm PwC, the metaverse market size, which was $46.4 billion in 2019, is expected to grow rapidly to $1.5 trillion by 2030.

In Korea, metaverse ETFs are being launched one after another on the 13th. These include KB Asset Management’s ‘KBSTAR iSelect Metaverse,’ NH-Amundi Asset Management’s ‘HANARO Fn K-Metaverse MZ,’ Mirae Asset Global Investments’ ‘TIGER Fn Metaverse,’ and Samsung Asset Management’s ‘KODEX K-Metaverse Active.’

Domestic asset management companies have already grasped the market potential by launching metaverse public offering funds. As of the 14th, 173.9 billion KRW (net assets) has flowed into three metaverse ETFs from three asset management companies listed on the domestic stock market since June. Unlike the stock market, their returns are also steady. KB Asset Management’s Global Metaverse Economy, which was the first to launch a metaverse public offering fund in the domestic market, recorded a 3.61% return from June to the present. Samsung Asset Management’s Global Metaverse (1.60%), launched a month later, is also generating steady profits despite fluctuations in the global stock market.

With growing interest in ESG (environment, social, governance), products aimed at healthy investment are also emerging one after another. Shinhan Asset Management launched Korea’s first ETF product investing in the U.S. S&P 500 ESG index (SOL U.S. S&P 500 ESG ETF) on the domestic market. This product invests in companies with high ESG scores within the S&P 500, which has been hitting record highs this year.

Recently, products structured as ETFs that allow individuals to invest in global carbon emission permits have also attracted attention. These products invest in the European carbon emission futures market, a representative market for carbon permits, as well as carbon permit markets in the U.S. and other regions outside Europe. Samsung Asset Management (1 type), Shinhan Asset Management (2 types), and NH-Amundi Asset Management (1 type) have opened the market.

Within this year, products investing in the golf industry are also expected to be available. NH-Amundi Asset Management plans to launch an ETF within the year by developing related indices with financial information provider FnGuide for golf ETF development. Candidates for investment include screen golf companies, golf apparel companies, and companies owning golf courses. Recently, the golf industry has been booming as travel demand has shifted to golf courses due to COVID-19.

An industry insider said, "As individual investors’ interest in ETFs grows, various ETFs tailored to their preferences are being launched." However, they cautioned, "Since investments are limited to specific themes, if the enthusiasm cools down, returns may also decline, so caution is necessary."