Viewers of Sunday’s Academy Awards and those not living in a cave by now the tale of the “selfie” snapped by host Ellen DeGeneres.
Featuring some of Hollywood’s most celebrated actors and actresses, the picture has reportedly become the most retweeted photo in the history of Twitter (NYSE: TWTR). Movie buffs and casual Twitter users see just another selfie. Investors see potential gold for Samsung, the maker of the mobile phone Ellen was seen with throughout Oscar night.
Arguably prescient then is Tuesday’s introduction of the Horizons Korea KOSPI 200 ETF (NYSEArca: HKOR), which features an allocation to Samsung, a company that is comparable to being the General Electric (NYSE: GE) of South Korea, of more than 20%.
Talk of Hollywood and selfies aside, HKOR is not the first South Korea ETF to hit U.S. exchanges. The fund will compete with the iShares MSCI South Korea Capped ETF (NYSEArca: EWY) and the First Trust South Korea AlphaDEX Fund (NYSEArca: FKO). However, HKOR has some advantages. [Bull Case for South Korea ETFs]
For example, HKOR is the only U.S.-listed South Korea ETF that acts as a proxy for the Kospi 200, South Korea’s equivalent of the S&P 500. The Kospi 200, HKOR’s underlying index, is the most widely used Korean stock benchmark used in Korea, as well as the rest of Asia and provides investors with an economic, liquid, and reliable method for replicating the performance of the Korea stock market, according to Horizons.
By tracking that index, HKOR will offer investors access to 200 stocks in Asia’s fourth-largest economy. Combined, EWY and FKO have just 156 holdings. New York-based Jane Street will serve as HKOR’s lead market maker, working to ensure adequate liquidity for the fund while South Korean markets are closed.
“HKOR will be the lowest-cost (0.38% Total Gross Expense Ratio) and most broadly diversified Korean equity ETF in the U.S.” said Howard Atkinson, Managing Director, Horizons USA, in a statement. “Korea is often listed as an emerging market economy, but with a well-established manufacturing base and steady GDP growth, it has an economic profile that is more in line with well-established developed markets, generally making it a more stable entry point into emerging market investing.”
Horizons’ relationship with Mirae Asset Global Investments, a unit of of the Mirae Asset Financial Group, one of Asia’s largest independent financial services groups, is another plus for HKOR.
“We think having Mirae Asset Hong Kong sub-advise HKOR is a great benefit to potential investors,” said Atkinson in the statement. “We have great confidence in knowing that the ETF portfolio is being monitored by a professional portfolio management team based in Asia with extensive experience in the Asian equity market.”
Mirae Asset had $22.7 billion in emerging markets assets under management at the end of 2013.
South Korea is one of the least volatile emerging markets, although it is not found in all major emerging markets ETFs. For example, Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) dropped South Korea from its lineup when it transitioned to the FTSE Emerging Markets Index last year. That opens the door for HKOR to be considered by advisors as an avenue for adding South Korea exposure as a complement to positions in VWO.
Data Courtesy: Horizons ETFs
ETF Trends editorial team contributed to this post.