Exchange-traded funds market likely to triple

Korea’s exchange-traded funds market, Asia’s fourth-biggest, may more than triple over the next seven years, according to Samsung Asset Management.

The value of ETF assets in the country may grow by an annual average rate of 20 percent to about 65 trillion won ($58 billion) by 2020, said Lee Jung-hwan, head of the Seoul-based company’s ETF team. That compares with about 18 trillion won now, according to Korea Exchange data.

The Korean market for ETFs, which are typically designed to mimic the performance of indexes, commodities or baskets of assets, has grown by an annual average of 46 percent through 2012 since they were first introduced in 2002, local bourse data show. Their value may surge to about 30 trillion won by 2015, the Korean exchange said in January.

“ETFs are still the hottest product,” Lee said in Seoul. “The market still has huge growth potential. Individuals as well as institutions continue adding ETFs to portfolios as the products are easy and cheap to trade and offer wider access to various types of assets.”

A total of 136 ETFs are listed on Korea Exchange, including products that track stock indexes, industry sectors, government bonds and gold futures, according to the bourse.

Equity-related ETFs may be more attractive to investors than commodities if the global economy improves, Lee said. Samsung has listed 28 ETFs on the bourse, more than half of which are equity-linked, he said. Four are for commodities, including copper and soybeans.

Samsung Kodex Gold Futures Special Asset ETF is worth about 40 billion won, compared with 46 billion at the end of last year as prices dropped, Lee said. The product, which started in 2010, tracks the performance of the S&P GSCI Gold Index Total Return.

The size of the global exchange-traded products industry grew 27 percent last year and reached $2 trillion in assets under management on Jan. 18 this year, according to a Jan. 25 statement on the Web site of BlackRock.

Korea had ETF assets of $12.7 billion last year.

Bloomberg