As artificial intelligence (AI) has become a key investment theme driving global stock markets, analysts suggest that attention should shift from AI itself to how it will transform various industries. While investments in AI infrastructure, such as semiconductors and data centers, remain crucial, the focus is expected to move toward industries that leverage AI to enhance productivity and create new value.
In a recent interview with Aju Economy, Kim Seung-hyun, head of the ETF and Quant Solutions Division at Hana Asset Management, stated, "The reason for developing AI is ultimately to use it in existing industries. Among various sectors, I believe the medical field is likely to benefit the most from AI applications."
AI will enhance productivity in the medical industry
Since taking the helm of the ETF and Quant Solutions Division last year, Kim has overseen the overall strategy for 1Q ETFs. With over 15 years of experience in securities firms and asset management companies, he is a seasoned expert in the ETF sector.
Kim identifies the medical sector as a key investment theme. He noted, "Fields such as drug development, robotic surgery, and personalized medicine using patient data are areas where AI can play a significant role. As AI accelerates, productivity in the medical industry will also increase."
He also highlighted physical AI as an area to watch. Kim remarked, "Factory automation and physical AI are sectors that will gain attention in the future. With rising labor costs and increased efficiency, humanoid robots and autonomous vehicles will become more prevalent." He added that an expansion in high-bandwidth memory (HBM) supply would enhance the performance and utility of AI chips, leading to faster adoption of AI in industries like autonomous driving and humanoid robotics.
In fact, Hana Asset Management launched the '1Q U.S. Medical AI' ETF last July, which invests in U.S. biotech companies. According to Koscom ETF Check, as of today, this ETF includes major holdings such as Tempus AI (25.14%), Recursion Pharmaceuticals (15.01%), and Intuitive Surgical (7.73%). This product targets sectors where AI and healthcare intersect, anticipating significant growth.
Semiconductor and AI cycles will not end soon
Despite recent profit-taking in major semiconductor stocks raising concerns about a potential peak, Kim views the AI and semiconductor cycles from a long-term perspective. He stated, "Rather than expecting the semiconductor cycle to end in 2-3 months, I believe that demand for memory semiconductors and AI will persist for a much longer period. This cycle is not expected to conclude quickly but will continue over the medium to long term."
This outlook is reflected in the composition of Hana Asset Management's ETF products. The firm manages '1Q K Semiconductor TOP2+' and '1Q K Semiconductor TOP2 Bond Mixed 50', both of which have grown their net assets to over 500 billion won. These products heavily feature top stocks like Samsung Electronics and SK Hynix, with low total expense ratios of 0.20% and 0.01%, respectively. Recently, the base index for '1Q K Semiconductor TOP2+' was rebalanced to include SK Square and Samsung Electro-Mechanics.
Kim explained, "I believed that investors would prefer a medium- to long-term approach rather than short-term investments, which is why I considered expense ratios to be an important factor. I think this reflects the needs of investors looking for long-term investment opportunities."
ETF market shows signs of concentration
Kim identified 'concentration' as a significant variable in the domestic ETF market. He expressed concern, stating, "It seems that there is increasing concentration in various aspects. While concentration can be advantageous when returns are high, it can also exacerbate market volatility during turbulent times."
He emphasized the importance of diversification as volatility increases. "Instead of focusing on a single area, I believe it is better to diversify assets across countries, sectors, some commodities, and bond-mixed types," he advised.
Additionally, he suggested that holding cash-equivalent assets, such as parking ETFs, at around 5-10% could be a prudent strategy. He cautioned that filling a portfolio solely with growth stocks could be burdensome if diversification is challenging.
Growth in the ETF market driven by performance-based products
The domestic ETF market continues to grow rapidly, with total net assets reaching approximately 500 trillion won. Kim assessed that there is still ample room for market growth, particularly noting that inflows from retirement pension funds will be a key driver of expansion.
He stated, "As of the end of last year, retirement pension reserves surpassed 500 trillion won, and the proportion of performance-based products has doubled over the past three years. It is significant that funds are continuously moving into performance-based products, including ETFs, from retirement pensions."
Kim added, "If the proportion of performance-based products increases further, it could create a structure where tens of trillions of won in new funds flow into the retirement pension market annually. I believe the growth potential for the ETF market is substantial."
Regarding product strategies for the second half of the year, he mentioned, "We are currently considering what new growth industries can be developed using AI. There are still many lineups to fill out. We expect to continuously introduce innovative thematic products that reflect the latest industry trends and developments, including U.S. dividends, covered calls, and income-generating products."
* This article has been translated by AI.
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