[Practical Investment] Complete Your Portfolio with Smart ETFs

More Than 20% Returns in January for KODEX Semiconductor Leverage and Others
Investment Opportunities in the AI Industry and Gold

The total asset value of domestic Exchange-Traded Funds (ETFs) reached approximately KRW 182.8 trillion, an increase of KRW 9.2572 trillion (5.3%) compared to the end of the previous month. As of the end of last month, the number of ETFs listed on the domestic stock market totaled 941, including 536 domestic ETFs and 405 overseas ETFs. The average daily trading volume of ETFs in January was KRW 3.749 trillion, up 5.5% from the previous month.

With active investment through ETFs, several ETFs such as ▲KODEX Semiconductor Leverage ▲PLUS Hanwha Group Stocks ▲TIGER Semiconductor TOP10 Leverage ETF posted returns exceeding 20% during January. The number of investors using ETFs to build their investment portfolios is increasing. Major domestic ETF management companies recommended promising ETFs such as 'RISE US AI Value Chain TOP3 Plus,' 'SOL US AI Power Infrastructure,' and 'ACE KRX Gold Spot.'

Since Donald Trump took office as the President of the United States, significant changes have emerged. President Trump, with his pro-business stance, is expected to abolish or ease various financial regulations to activate capital financing. To enhance technological security and widen the technology gap with China, efforts are underway to relax regulations on autonomous vehicles, expand investments in artificial intelligence (AI) infrastructure, and control AI chip exports.

KB Asset Management recommended the RISE US AI Value Chain TOP3 Plus ETF as suitable for investing in the growth of the AI industry. They advised caution against concentrating investments solely on AI hardware or the 'Magnificent 7 (M7),' which includes the seven largest US big tech companies, due to concerns about tariff backlash. AI software and AI service infrastructure sectors, which have low overseas sales ratios and high domestic sales ratios in the US, are considered industries that can avoid tariff impacts. The RISE US AI Value Chain TOP3 Plus ETF invests in companies such as Oracle, NVIDIA, and Microsoft (MS), which are expected to benefit from the $500 billion AI infrastructure project called 'Stargate.'

No Areum, head of the ETF Business Division at KB Asset Management, stated, "This product includes the core companies of the Stargate project and technology partner companies at the highest weight," and added, "Considering the long-term growth potential of the AI industry, we recommend steady investment through pension accounts and Individual Savings Accounts (ISA) with a low total expense ratio (annual 0.01%)."

Investment in power infrastructure is also essential in relation to the US government's AI industry promotion. The SOL US AI Power Infrastructure ETF, recommended by Shinhan Asset Management as a promising ETF, diversifies investments across 20 stocks related to data center infrastructure, power grid system equipment, and the nuclear value chain. It is structured to invest in the value chain encompassing data centers that manage the enormous amount of data generated to implement AI, the power demand required to operate data centers, and nuclear power as a carbon-free power source capable of producing this electricity.

Kim Jeong-hyun, head of the ETF Business Division at Shinhan Asset Management, explained, "The new demand increase due to the expansion of data centers triggered by AI is a phenomenon appearing for the first time in the past 20 years," and added, "The US power infrastructure and nuclear value chain are emerging as industries to watch most in the AI era." He further stated, "The Stargate project shows the intention to start US prioritization from the AI theme," and "Expectations for the AI theme will continue for a long time."

Korea Investment Management recommended the ACE KRX Gold Spot ETF, the largest gold ETF in Korea. The ACE KRX Gold Spot ETF surpassed KRW 800 billion in net assets on the 4th. It tracks the KRX Gold Spot Index announced by the Korea Exchange. Since it directly invests in gold spot, it can be invested through pension accounts. Since its listing on December 15, 2021, it has recorded a return of 110% as of the 6th. It has recently gained popularity, recording 25 consecutive trading days of net purchases by individuals since December 26 last year.

Nam Yong-su, head of ETF Management at Korea Investment Management, introduced, "Due to increased economic uncertainty following President Trump's America First policy, demand for safe assets like gold surged." He emphasized, "Due to the trading characteristics of gold spot, it has a currency exposure structure," and added, "The rising KRW-USD exchange rate is also a factor contributing to its popularity."