KPOP and Korean Drama ETF launched in New York
ETF newcomer Contents Technologies is partnering with the white labeller Exchange Traded Concepts to launch the world’s first ETF targeting Korea’s entertainment industry.
The KPOP and Korean Entertainment ETF (KPOP) tracks the KPOP Index, which has been purpose built by CT.
The index is made of 30 KRX-listed companies whose primary business is in music, movies, drama, entertainment, and content.
Companies are market weighted, however those that more closely fit the KPOP theme are more index-eligible and can take more weight.
The fee is 0.75%.
Bernie’s commentary – My personal thoughts on a KPOP ETF
- Korea has a vibrant ETF market yet there are no KPOP ETFs listed in Seoul as such. That said, there are media and contents ETFs (such as 228810:KS) tracking the local entertainment sector. My guess is that this ETF is just a Korean media-sector tracker, marketed as a KPOP ETF for foreign audiences.
- Koreans themselves are usually not very optimistic on Korea’s stock market. Rich Koreans mostly invest in property, especially in Seoul. The Kospi hasn’t been the best performer and usually goes to sleep for five years at a time.
- We had that phase of “novelty ETFs” back in 2017 and 2018. These were based on things like: sports fans, the Republican Party’s policies, Quincy Jones music, and obesity. Novelty ETFs had flimsy investment theses behind them. (The more serious and better-performing ones evolved into thematic ETFs). But the point was always more to capture the retail imagination. It looks like this trend is back again.
- New academic research claims that ETF inflows are a predictor of underperformance, i.e. that ETFs that win big inflows underperform shortly thereafter. The conclusion: “ETFs with large inflows predictably earn lower future returns than ETFs with large outflows. Moreover, we find that non-fundamental demand causes ETF investors to systematically mistime their investment.”
- The L&G Multi-Strategy Enhanced Commodities UCITS ETF (ENCO) has continued its tear, outperforming more vanilla commodities indexes through this week’s volatility. There is no public index methodology document, which is weird. Commodities may be the one asset class where smart beta reliably works, due to futures market inefficiencies and non-economic players. There’s no SPIVA scorecard or anything like that for active vs passive in commodities investing. It’s an under-researched area.
- The Night Effect ETF (NSPY, NIWM) – which aims to exploit the so-called “night effect”, where US stocks do better at night – has failed to outperform so far. We’re only a month in though.