As South Korea approaches the milestone of 1,200 exchange-traded funds (ETFs), it has been revealed that one in three passive ETFs tracks the same index as another product. The surge of 'lookalike ETFs' centered around popular indices like the KOSPI 200 and S&P 500 has intensified competition among fund managers.
According to the Korea Exchange on September 21, there are currently 1,171 ETFs listed on the domestic market. These ETFs track or utilize 887 underlying indices, managed by 28 different firms.
An analysis of the basic information of all ETFs by Ajou Economics, as of September 18, found that there are 847 passive ETFs in total. Among these, 299 (35.3%) have other passive ETFs that track the same underlying index. This means that one in three passive ETFs competes with another product for the same index.
Notably, multiple products from various managers have concentrated on indices that represent both domestic and international markets. Excluding leveraged and inverse products, there are 15 general passive ETFs that track the KOSPI 200. Similarly, there are 15 ETFs tracking the S&P 500, and 10 that follow the Nasdaq 100.
However, just because ETFs track the same index does not mean their conditions are identical. Management fees and trading volumes can vary significantly between fund managers.
For instance, the total management fees for the 15 general passive ETFs tracking the KOSPI 200 range from 0.017% to 0.325% annually, showing a nearly 19-fold difference between the lowest and highest fees. RISE 200, PLUS 200, and ACE 200 each have a total management fee of 0.017%, while TREX 200 charges 0.325%. KODEX 200 has a fee of 0.15%, and TIGER 200 charges 0.05%.
Similar discrepancies are observed among S&P 500 products. The total management fees for the 15 general passive ETFs range from 0.004% to 0.070%, resulting in a difference of over 17 times between the lowest and highest fees.
The number of ETF products has been rapidly increasing this year. According to the Korea Exchange, 137 new ETFs have been listed from January to September 18. Of these, 99 were launched in the first half of the year, with new products continuing to emerge in the second half.
Recently, ETFs focusing on specific industries, such as artificial intelligence (AI) and semiconductors, have also been introduced. On September 15, four ETFs investing in domestic HBM semiconductors, AI semiconductor materials, components, and equipment, as well as U.S. AI memory and agent AI, were launched simultaneously.
A securities industry official noted, "Even for products investing in the same KOSPI 200 or S&P 500, differences in fees and trading volumes mean that it is increasingly important to consider not only which index to choose but also which ETF to select among those tracking the same index."
* This article has been translated by AI.
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