Hanwha Asset Management's 'Dividend Growth Index' Fund... "No.1 Domestic Stock Index Fund Performance This Year"

Hanwha Asset Management announced on the 16th that its 'Hanwha Dividend Growth Index' fund, which invests in domestic mid-to-large cap dividend growth stocks, has recorded the highest year-to-date return among domestic equity index funds.

According to Korea Fund Evaluation's Fund Square, as of the 14th, the year-to-date return of the 'Hanwha Dividend Growth Index' fund was 6.72%, significantly outperforming the benchmark index 'KOSPI200' return (-0.17%) and ranking first among domestic equity index funds (excluding leveraged and inverse funds).

This fund also ranked first among domestic equity index funds in recent 1-month and 6-month returns, achieving 11.40% and 15.41% respectively. Compared to active domestic equity dividend funds, it also holds a top position in year-to-date returns.

The fund’s performance is interpreted to be influenced by the recent government announcement of the 'Corporate Value-Up Program' aimed at resolving the 'Korea Discount,' which has driven a strong upward trend in the 'low price-to-book ratio (PBR)' theme.

Jeon Su-gyeong, manager of the Quantitative Management Team in the Listed Securities Division at Hanwha Asset Management, commented on the upward trend of the 'low PBR' theme, stating, "Whether the upward trend of these companies continues will depend on the government's specific policies," and added, "Until then, we expect the strength in low PBR-related sectors such as automobiles, finance, and holding companies to persist."

The 'Hanwha Dividend Growth Index' fund seeks better performance compared to the 'KOSPI200' and other dividend stock funds at a lower cost than active funds. It tracks the mid-to-large cap focused 'S&P Korea Dividend Opportunity Index.' The fund invests in dividend growth companies with dividend yields above 2% and aims for capital gains through future earnings growth.

Dividend growth companies are those that consistently increase their dividends. The ability of a company to steadily raise dividends indicates that the profits, which are the source of dividends, are also steadily growing. Although the dividend yield and payout ratio of the domestic stock market are still lower than the global average, recent government policies such as the 'Corporate Value-Up Program' are expected to provide significant growth potential.

In fact, the KOSPI dividend yield has steadily increased since hitting a low in 2013. According to FnGuide, the KOSPI dividend yield (based on common stock cash dividends) rose from 1.03% in 2013 to 2.2% in 2022, more than doubling over approximately ten years.

From January 1, 2011, to December 31, 2022, the annual average dividend yield of the 'S&P Korea Dividend Opportunity Index,' which the 'Hanwha Dividend Growth Index' fund tracks, was 3.71%. This is more than twice the KOSPI dividend yield of 1.84% during the same period. Dividend growth companies have thus seen a relatively larger increase in dividend yields compared to the KOSPI.

As of the 31st of last month, the main sectors included in the 'Hanwha Dividend Growth Index' fund were finance (36.03%), services (9.64%), chemicals (9.07%), insurance (7.37%), and distribution (6.16%). The constituent stocks include ▲LX International ▲HD Hyundai ▲JR Global REITs ▲GS Construction ▲Hana Financial Group ▲Woori Financial Group ▲GS ▲LG Uplus ▲Lotte Holdings ▲Lotte Fine Chemical, among others.

Hanwha Asset Management explained that the high weighting of March fiscal year-end financial stocks, which are expected to have high dividend yields, makes the fund a suitable investment option for investors seeking stable dividend income along with capital gains.

Manager Jeon emphasized, “The Hanwha Dividend Growth Index fund invests in companies with continuously growing dividends. In the short term, it is expected to benefit from the government’s value-up program, and in the long term, investors can share in dividend income driven by corporate earnings growth.”