Two new active exchange-traded funds (ETFs) were listed in South Korea on Jan. 20, adding options tied to policy-driven themes and income-oriented real assets. The products are the RISE Korea Strategic Industries Active ETF and the ACE REITs and Real Estate Infrastructure Active ETF.
The RISE Korea Strategic Industries Active ETF is designed to invest in domestic stocks linked to six sectors where policy momentum is expected to be a key driver: AI, biotech, culture, defense, energy, and manufacturing. The portfolio is positioned around companies viewed as core beneficiaries of government priority programs, where supplemental budgets and larger public spending allocations are anticipated.
Its benchmark is the KAP Korea Strategic Industries Index. The index is built using six sector classifications and 11 theme keywords, including AI semiconductors, AI software, biotech, entertainment, food and beverages, cosmetics, defense, power generation, renewable energy, smart factories, and robotics. It first calculates a similarity score for each stock and removes the bottom 30% by score.
The remaining universe is then ranked using a composite score that assigns a 0.7 weight to market-cap percentile and a 0.3 weight to keyword percentile. Based on the final score, the index selects the top five stocks for each keyword. The benchmark is rebalanced twice a year, on the first business day of the third week of June and December, and weights constituents by free-float market capitalization. A 25% cap applies to individual holdings. The ETF’s total expense ratio is 0.50%.
The ACE REITs and Real Estate Infrastructure Active ETF targets domestic REITs and infrastructure-related securities, with infrastructure fund exposure set to expand to around 45%. The strategy aims to combine potential policy support with stable cash-flow characteristics, reflecting expectations for infrastructure-related policy measures.
Its benchmark is the FnGuide Macquarie Infrastructure Dividend REITs Index. The index first includes Macquarie Infrastructure, then screens listed domestic REITs and infrastructure names based on liquidity requirements, including market capitalization above KRW 100 billion, trading value above KRW 100 million, and a free-float ratio above 10%. Eligible constituents must also have paid dividends for three consecutive years, after which the top 14 names by market capitalization are selected.
The benchmark is rebalanced twice a year, two business days after the March and September derivatives expiry dates. Constituents are weighted using adjusted market capitalization, calculated as market cap multiplied by the average dividend yield over the past three years. Macquarie Infrastructure is adjusted daily to a 29.5% weight, while other REITs collectively account for 70.5% of the index. Caps are set at 29.5% for Macquarie Infrastructure and 27% for other constituents. The ETF’s total expense ratio is 0.06%.
As of the listing date, key constituents highlighted for the portfolio include Macquarie Infrastructure, KB Balhae Infrastructure, SK REITs, Lotte REITs, Shinhan Alpha REITs, Hanwha REITs, and Koramco Life Infrastructure REITs.
According to Hana Securities Global Asset Research, the two newly listed ETFs reflect ongoing product segmentation in South Korea’s ETF market, with one structured around policy-linked strategic industry themes and the other oriented toward REITs and infrastructure exposure with an income-focused profile.
