Active ETFs: New Dynamism in the KOSDAQ Market
The introduction of Korea's first KOSDAQ active ETFs, 'KoAct KOSDAQ Active' and 'TIME KOSDAQ Active', has drawn substantial attention due to significant influxes of individual investor funds. Unlike traditional passive ETFs that mimic indices, these active ETFs focus on individual stock selection, pursuing excess returns and have achieved KRW 1.199 trillion in personal net purchases in a short period. Supporting government policies aimed at activating the KOSDAQ market, along with anticipated tax incentives, have further stimulated investor interest.
KoAct's independent alpha strategy maintains a low correlation with the KOSDAQ index, while TIME aims for profit maximization through a high market cap weight. These features are expected to bolster the discovery of small and mid-cap stocks in the KOSDAQ, thus enhancing the index's influence. Despite price rises in some constituent stocks, a general decrease in trading volume denotes potential market volatility.
Concerns arise regarding market disorder and regulatory gaps linked to these new listings. Specifically, the lack of clear rules on pre-listing portfolio disclosures highlights the need for stronger regulations. Appropriate responses by financial authorities are crucial for maintaining a secure and fair market environment. As more asset managers prepare to enter this sphere, the long-term growth prospects for the KOSDAQ market appear promising.
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