Hantoo Asset Management Launches 'ACE KPOP Focus' ETF Concentrating on Entertainment Stocks

Korea Investment Trust Management announced on the 29th that the ACE KPOP Focus Exchange-Traded Fund (ETF) will be listed on the Korea Exchange on the 30th. To commemorate the new listing, on the 31st of this month, the ACE KPOP Focus ETF will be introduced through the content ‘Hantu Station’ on Korea Investment Trust Management’s official YouTube channel.

The ACE KPOP Focus ETF is a concentrated product that invests intensively in leading domestic entertainment companies. Its underlying index is the 'iSelect K-POP Focus Index,' calculated and published by NH Investment & Securities. This index includes the top 10 stocks with market dominance in the industry based on KPOP entertainment-related sales data. A distinctive feature is that the top 4 stocks among the 10 have their weights increased up to 95%.

As of the 26th, the top constituents of the iSelect K-POP Focus Index include ▲SM Entertainment (25.92%) ▲HYBE (24.90%) ▲JYP Ent (23.95%) ▲YG Entertainment (19.34%). The four focused investment targets were selected from companies whose average KPOP entertainment sales ratio exceeded 50% over the past two years and generate revenue through music and album releases as well as performance activities.

The ACE KPOP Focus ETF also plans to benefit from industry growth by concentrating investments on these four core companies showing outstanding growth in the KPOP market. According to the Korea Creative Content Agency and company disclosures, these four companies have recorded an average annual sales growth rate of 28% over eight years since 2016, and as of last year, they posted an average operating profit margin of 19.13%.

Although there has been some price adjustment in entertainment-related stocks this year, earnings forecasts remain positive. According to FnGuide, the operating profit of the four companies in 2023 is expected to increase by an average of 70.9% compared to the previous year, and the operating profit estimates for 2024 and 2025, based on average forecasts, also show a steady upward trend.

Nam Yong-su, Head of ETF Management at Korea Investment Trust Management, explained, "The expansion into global markets and revenue growth in the entertainment industry utilizing various platforms such as performances and music will continue." He added, "In fact, major shareholders of some entertainment companies that recently experienced stock price adjustments have shown confidence in growth by purchasing their own shares."

He continued, "Especially in the first half of this year, many rookie groups are scheduled to debut, so investor interest related to the entertainment industry will continue. By using the ACE KPOP Focus ETF, which invests heavily in the four core companies within the entertainment industry, investors can benefit from the industry's growth," he emphasized.

Meanwhile, the ACE KPOP Focus ETF is a performance dividend-type product, and principal loss may occur depending on the management results.