South African Bonds

South African Bonds, Korean Tech

Korea

Kim Kindex learns from its snubbing, lists physical Kosdaq tracker

Korean Investment Holdings, one of the largest finance companies in Korea, is listing a core Kosdaq 150 tracker, which is Korea’s tech index and equivalent of the Nasdaq 100 (sort of).

The Kim Kindex Kosdaq 150 ETF (354500) will physically track its index. Kim Kindex already has a synthetic ETF that tracks the Kosdaq. However investors have snubbed it for the last four years and invested only its competitor products which are all cheaper and physically backed. 

An expense ratio isn’t given at this stage. But if the fund is to have a snowflake’s chance it’s going to have to be very cheap.

KRX TickerFund NameAUM ($USD)TER
229200Samsung Kodex Kosdaq 150 ETF $      453.9M 0.25%
232080Mirae Asset Tiger Kosdaq 150 ETF $      323.8M 0.19%
270810KBStar Kosdaq 150 ETF $      222.3M 0.18%
251890Kim Kindex Kosdaq 150 (Synthetic) ETF $        0.48M 0.36%

Analysis – synthetic core equity ETFs? After you.

To my mind there’s something cheap and nasty about offering swap-backed core equity ETFs in this day and age.

For Kim’s synthetic Kosdaq 150 ETF, they can simply hedge their swap by buying one of the physically replicating ETFs from their competitors. The product, then, becomes just a toll booth for giving investors access to the other, cheaper, competitor ETFs.  

To judge by AUMs, it looks like Korean investors haven’t been fooled. That’s good to see. And Kim is changing its product offering thanks to this new listing. That’s good to see too.

South Africa

Satrix, South Africa’s largest ETF provider, is listing a South African government bond ETF. The Satrix SA Bond Portfolio (STXGOV) Satrix SA Bond Satrix ETF will track the S&P South Africa Sovereign Bond 1+ Year Index.

The fund will invest in SA bonds denominated in ZAR. While the yield is crazily high – the index yield to maturity is 10% – investors could lose almost all the gains on the weakening ZAR.

The ZAR has been in a state of structural decline against the USD the past 20 years.