Active exchange-traded funds in Korea thrive with stellar returns

[Courtesy of Timefolio Asset Management]

South Korean major private equity firms Timefolio Asset Management Co. and Assetplus Investment Management Co. have seen their active exchange-traded funds (ETFs) achieve higher returns this year. Active ETFs are a type of an ETF that has a manager or team making decisions on the underlying portfolio allocation.

According to the Korea Exchange on Sunday, TIMEFOLIO Carbon Neutral Active ETF and AssetPlus Global Platform Active ETF achieved 75.49 percent and 58.64 percent return compared with the beginning of the year.

TIMEFOLIO Carbon Neutral Active ETF tracks a basket of stocks that stand out in terms of carbon neutrality. The commitment to high-growth stocks with a focus on profitable secondary battery makers allowed the portfolio to achieve significant returns.

As of Friday, LS Electric Co. held the largest holding of 8.49 percent in the portfolio, followed by PharmaResearch Co. with 7.63 percent and Eco Pro with 6.12 percent.

LS Electric, a power grid stock, saw its share price rise by 63 percent this year as it won rising orders from abroad with an expectation of record earnings.

Kim Ji-san, an analyst at Kiwoom Securities Co., revised the stock’s target price to 110,000 won ($86.41) per share from the previous 100,000 won, adding that “profit estimates, based on the backlog of orders, are rising faster than the share price.”

Shares of PharmaResearch, a manufacturer of injectable regenerative medicine Rejuran, also climbed by 92 percent during the same period.

“Investors are advised to focus on Rejuran-labeled cosmetics with the potential to develop into a unique brand,” said Ha Tae-gi, a market expert at Samsung Securities Co. who raised the target price by 30,000 won to 180,000 won per share.

“The carbon neutrality portfolio includes stocks that experience growth in exports with a high level of commitment to the environment,” said Cho Sang-jun, a senior official from Timefolio. “As part of their effort to identify and invest in such stocks, managers make on-site trips to prospective companies.”

In addition, the eight ETFs launched by Timefolio, including TIMEFOLIO US Nasdaq 100 Active ETF and TIMEFOLIO K-Culture Active ETF, achieved high profits this year. Timefolio is known to have delivered profits even in a highly volatile market.

Assetplus Investment Management achieved similar performance in its active ETFs.

With U.S. electric vehicle (EV) manufacturer Tesla Inc. as its largest holding of 27.8 percent, Assetplus Global Platform Active ETF saw its returns rise after an impressive surge of 125.6 percent on year in the EV maker’s stock price.

“Our approach to maintaining positive returns even during the periods when Tesla may underperform involves constant updates in the portfolio that engages stock with higher profits and lower risks,” said Ko Tae-hoon, a top official from the management firm.

“The key to success was a combination of our extensive expertise in international stocks and a strategy that keeps the number of managed stocks around 25,” Ko added.

Assetplus saw its strategy on sustainable value pay off in ETFs, as evident in the returns of Assetplus Korea Blacksmith Active ETF and Global Blacksmith Active ETF, which stood at 39.6 percent and 31.79 percent, respectively.