Kiwoom Asset Management Launches Korea's First Active REITs ETF

'Heroes REITs Active ETF'

[Asia Economy Reporter Hwang Yoon-joo] Kiwoom Asset Management has launched the first active REITs ETF in Korea.

Kiwoom Asset Management newly listed the ‘Heroes REITs Aegis Active ETF’ on the 24th.

The ‘Heroes REITs Aegis Active ETF’ is Korea’s first active REITs ETF that selectively invests in domestically listed REITs through investment advisory from Aegis Asset Management. The investment advisory is handled by Aegis Asset Management. In particular, the management team responsible for the advisory operates as a team specializing exclusively in listed REITs, possessing proven expertise and investment records in this field.

The underlying index of this ETF is the ‘iSelect REITs Index,’ calculated and published by NH Investment & Securities. It is an index composed of at least 10 and up to 50 of the top market capitalization stocks among publicly offered REITs listed in Korea under the Real Estate Investment Company Act, weighted by free-float market capitalization with a cap of 20% per stock. The ‘Heroes REITs Aegis Active ETF’ is an active exchange-traded fund aiming to outperform its benchmark, the ‘iSelect REITs Index.’

Since 2018, the government has provided various benefits to activate publicly offered REITs. If an investor invests in publicly offered real estate collective investment securities by December 31, 2023, and holds them for more than three years, dividend income and financial investment income (limited to income generated within three years from the investment date) up to a total investment amount of 50 million KRW are exempt from being included in comprehensive income tax base and financial investment income tax base, and are subject to separate taxation at a rate of 9.9%.

As of the listing date on May 24, there are a total of 19 listed REITs in Korea, with a market capitalization of about 8 trillion KRW. Due to benefits for publicly offered REITs, existing assets held by private REITs are expected to gradually convert to public REITs, and asset securitization through REITs of real estate owned by large corporations is expected to become more active.

According to the Korea REITs Association, the number of listed REITs, currently 19, is expected to increase to 100 by 2030, and the market capitalization of listed REITs is expected to grow from the current level of about 10 trillion KRW to 150 trillion KRW by 2030.

Kim Do-yoon, head of ETF Management Team 2 at Kiwoom Asset Management, emphasized, "The domestic listed REITs market is still in its early stages, so active investment based on value judgment of individual stocks is more appropriate."

Meanwhile, to commemorate the new listing of the ‘Heroes REITs Aegis Active ETF,’ Kiwoom Asset Management is holding an event for customers trading this ETF through Kiwoom Securities. During June, cultural gift certificates will be provided on a first-come, first-served basis based on daily trading volume.