Timefolio Asset Management, which has positioned itself as an 'active dynasty', has faced a setback in the competition to manage value-up exchange-traded funds (ETFs). It has been identified as the only value-up ETF listed on the domestic stock market that has recorded a negative (-) revenue this year. An analysis suggests that the decision by the fund manager to reduce the weighting of Samsung Electronics and increase automotive stocks worked against them.
Among 12 ETFs tracking the Korea Value-Up Index at the Korea Exchange, the product with the best revenue performance since the beginning of the year (as of April 15 closing price) is the 'KODEX Korea Value-Up' ETF managed by Samsung Asset Management. The revenue is 3.65%.
Following that, HANARO Korea Value-Up (3.64%), ACE Korea Value-Up (3.57%), 1Q Korea Value-Up (3.49%), KIWOOM Korea Value-Up (3.47%), SOL Korea Value-Up TR (3.32%), and RISE Korea Value-Up (3.15%) followed. All of them are passive strategy products that track the movements of the basic index.
Among the value-up ETFs, there are three actively managed strategy products where fund managers actively engage in rebalancing according to market conditions. The product with the best performance during the same period is the 'TRUSTON Korea Value-Up Active' ETF managed by Truston Asset Management, with a recorded revenue of 2.48%. The 'KoAct Korea Value-Up Active' ETF launched by Samsung Active Asset Management recorded 1.45%. Although it has a positive revenue, it still falls short of the passive performance.
During the same period, the revenue of the 'TIMEFOLIO Korea Value-Up Active' ETF launched by Timefolio Asset Management was -2.81%, which earned them the dishonor of being the bottom performer among all value-up ETFs. Even when looking specifically at the active ETFs with the same strategy, it had the lowest performance report. Active ETFs are more expensive in fees than passive ETFs as fund managers are more actively involved.
Analysis indicates that the relatively small weighting of Samsung Electronics in the TIMEFOLIO Korea Value-Up Active has led to exceptionally poor revenue. In the Korea Value-Up Index, Samsung Electronics and SK hynix account for 15% each. In the Timefolio product, the weightings for Samsung Electronics and SK hynix are 9% and 17%, respectively.
A source in the asset management industry noted, "The extreme weightings of these two stocks in the Korea Value-Up Index mean that when their prices rise, a product with even slightly smaller weightings will suffer a significant blow." The stock price of Samsung Electronics rose from 53,200 won at the end of last year to 56,600 won as of April 15 this year.
A representative of the asset management firm stated, "The increase in the weighting of automotive stocks such as Hyundai Motor and Kia has also impacted the revenue decline." The stock price of Hyundai Motor fell from 212,000 won at the end of last year to 187,000 won as of now (April 15). This representative added, however, that "if market conditions change in the future and the stocks selected by active managers surge, the active type could surpass the revenue of the passive type."