Exchange-traded funds tracking KOSDAQ's largest companies are drawing attention as signs of sector rotation emerge, with money that had concentrated in large-cap chipmakers such as Samsung Electronics (005930.KS) and SK hynix (000660.KS) shifting toward KOSDAQ growth stocks. Government policies to revitalize the KOSDAQ market and expectations for the disbursement of the National Growth Fund have added to the momentum, lifting returns on related ETFs.
The SOL KOSDAQ TOP10 posted a one-month return of 14.94% as of the previous session, the highest among KOSDAQ-related ETFs listed in South Korea, according to the Korea Exchange on the 28th. Analysts attribute the gains to money spreading from large-cap chipmakers into a wider range of sectors, along with improved investor sentiment as policy discussions on revitalizing the KOSDAQ market gained traction.
The SOL KOSDAQ TOP10 invests in the 10 KOSDAQ-listed companies with the largest average daily free-float market capitalization over the past three months. It is designed to spread holdings across the growth industries that define the KOSDAQ market, including robotics, semiconductor materials, parts and equipment, secondary batteries, and biotechnology and healthcare.
The underlying KOSDAQ TOP10 Index (PR) caps holdings at three stocks from any single industry group under the Global Industry Classification Standard (GICS), a safeguard against excessive concentration in one sector. Key holdings include Alteogen (196170.KQ), EcoPro (086520.KQ), EcoPro BM (247540.KQ), Rainbow Robotics, LEENO Industrial (058470.KQ), Wonik IPS (240810.KQ) and EO Technics. Unlike the benchmark KOSPI index, which is heavily weighted toward large-cap chipmakers, the fund spreads exposure evenly across KOSDAQ's main growth themes.
A tiered market system for the KOSDAQ, whose detailed criteria are expected to be released as early as next month, is raising hopes for a further rebound. The system would sort KOSDAQ-listed companies into premium, standard and watch categories and move them between segments based on set criteria. The aim is to encourage growth at innovative companies while screening out troubled ones, strengthening confidence and competitiveness across the market.
The 150 trillion won National Growth Fund is also expected to reinforce the medium- to long-term growth base of KOSDAQ companies. The fund will channel money into advanced strategic industries and their supply chains, including artificial intelligence, semiconductors, mobility, biotechnology and vaccines, and secondary batteries. Because many KOSDAQ-listed companies operate in the targeted industries, the fund is expected to improve both investment conditions and sentiment for those firms.
"As market flows normalize, conditions are likely to turn favorable for large-cap KOSDAQ stocks that have earnings, technology and liquidity, and that are readily accessible to institutional and foreign investors," said Kim Jung-hyun, head of the ETF business group at Shinhan Asset Management.
