Hanwha Asset Management is cutting the total fees on its unhedged and currency-hedged exchange-traded funds tracking the Standard & Poor's 500 index to 0.0062% a year, the lowest level in the industry.
The firm said on the 28th that it is lowering the total fees on the PLUS US S&P500 and PLUS US S&P500(H) funds to 0.0062% each. The fee on the PLUS US S&P500 falls from 0.07%, while the currency-hedged PLUS US S&P500(H) drops from 0.3%.
Both funds will apply a management fee of 0.0001%, an authorized participant fee of 0.0001%, a trustee fee of 0.0050% and an administration fee of 0.0010%. Based on total fees alone, the annual cost of a 10 million won investment falls to 620 won from 7,000 won for the unhedged fund and to 620 won from 30,000 won for the hedged fund.
Currency-hedged ETFs typically carry higher fees than unhedged versions because hedging against exchange-rate risk adds costs. By setting both funds at the same level, Hanwha Asset Management aims to let investors choose based on their outlook for the won-dollar exchange rate and their investment goals rather than on cost differences.
The unhedged fund is relatively advantageous for investors who expect the dollar to strengthen or who want to diversify into dollar assets. Those who expect the won to strengthen, or who want to track the S&P 500's performance while reducing the impact of currency swings, can use the hedged version.
Hanwha Asset Management said it decided to cut the fees in light of growing demand for long-term and installment-based investment in benchmark U.S. indexes, as the S&P 500 has extended a run of record highs. The index has set three record closing highs this month, and on the 13th it broke above 7,800 for the first time in intraday trading before closing at 7,798.99.
"The direction of the index cannot be predicted, but cost is a variable that investors can control with certainty," said Kum Jung-sup, head of the ETF business division at Hanwha Asset Management. "We wanted customers investing in benchmark U.S. indexes over the long term and through installments to be able to choose a product on identical cost terms, regardless of whether it is currency-hedged."
