Samsung Asset Management and Mirae Asset Management, among others, are on edge as they launched artificial intelligence (AI) and semiconductor exchange-traded funds (ETFs) this year, facing a sharp decline in related stocks. Concerns over data center regulations following the U.S. midterm elections are pressuring investor sentiment, potentially reducing the net assets of these ETFs and impacting management fee revenues.
According to the financial investment industry on November 8, the key themes in this year's ETF market have been semiconductors and AI. A total of 17 semiconductor-related ETFs have been launched this year by 10 firms, including three from Samsung Asset Management, two from Shinhan Asset Management, and two from Korea Investment Trust Management. In the AI sector, 22 ETFs have been introduced by 11 firms, including three each from Samsung Asset Management, Mirae Asset Management, and NH-Amundi Asset Management.
However, profitability concerns have intensified since the U.S. midterm elections, which saw the Democratic Party secure a majority in both the House and Senate, raising the possibility of data center regulations. This has led to increased fears of a slowdown in semiconductor demand. The Philadelphia Semiconductor Index, a key indicator of the global semiconductor market, has dropped 28% compared to a month ago and 12% from a week ago.
The decline in related ETFs has been significant. NH-Amundi Asset Management's Hanaro Semiconductor Core Process ETF fell 48.8% from 15,385 won to 7,875 won over the past month, while Mirae Asset Management's Tiger AI Semiconductor Core Process ETF dropped 48.7% from 16,685 won to 8,565 won. KB Asset Management's U.S. AI Cloud Infrastructure ETF also saw a 44.6% decrease during the same period.
The past week has shown pronounced declines as well. Compared to a week ago, when the impact of the midterm election results began to be felt, the Hanaro Semiconductor Core Process ETF and Tiger AI Semiconductor Core Process ETF fell by 28% and 26.2%, respectively. The KODEX U.S. AI Optical Communication Network ETF also dropped by 26.5%.
Net assets, which directly affect asset manager profits, are also on the decline. Compared to a month ago, the net asset values (NAV) of the Tiger AI Semiconductor Core Process ETF and Hanaro Semiconductor Full Process ETF decreased by 51.8% and 50.2%, respectively. The NAV of the Hanaro U.S. AI Optical Communication TOP10 ETF also fell by 49.0%.
Asset managers are concerned that a prolonged decrease in net assets could weaken their revenue base. Management fees are typically calculated based on the daily net assets of the fund, meaning that if average net assets decline, so too will fee income, assuming the fee rate remains constant.
An official from an asset management firm that launched a U.S. semiconductor-related ETF stated, "There are significant concerns about data center regulations and the policy dissonance between the Trump administration and the Democrats. While individual companies are not performing poorly and their fundamentals are not bad, the overall market sentiment is quite negative, leading to widespread concerns in the industry."
According to the financial investment industry on November 8, the key themes in this year's ETF market have been semiconductors and AI. A total of 17 semiconductor-related ETFs have been launched this year by 10 firms, including three from Samsung Asset Management, two from Shinhan Asset Management, and two from Korea Investment Trust Management. In the AI sector, 22 ETFs have been introduced by 11 firms, including three each from Samsung Asset Management, Mirae Asset Management, and NH-Amundi Asset Management.
However, profitability concerns have intensified since the U.S. midterm elections, which saw the Democratic Party secure a majority in both the House and Senate, raising the possibility of data center regulations. This has led to increased fears of a slowdown in semiconductor demand. The Philadelphia Semiconductor Index, a key indicator of the global semiconductor market, has dropped 28% compared to a month ago and 12% from a week ago.
The decline in related ETFs has been significant. NH-Amundi Asset Management's Hanaro Semiconductor Core Process ETF fell 48.8% from 15,385 won to 7,875 won over the past month, while Mirae Asset Management's Tiger AI Semiconductor Core Process ETF dropped 48.7% from 16,685 won to 8,565 won. KB Asset Management's U.S. AI Cloud Infrastructure ETF also saw a 44.6% decrease during the same period.
The past week has shown pronounced declines as well. Compared to a week ago, when the impact of the midterm election results began to be felt, the Hanaro Semiconductor Core Process ETF and Tiger AI Semiconductor Core Process ETF fell by 28% and 26.2%, respectively. The KODEX U.S. AI Optical Communication Network ETF also dropped by 26.5%.
Net assets, which directly affect asset manager profits, are also on the decline. Compared to a month ago, the net asset values (NAV) of the Tiger AI Semiconductor Core Process ETF and Hanaro Semiconductor Full Process ETF decreased by 51.8% and 50.2%, respectively. The NAV of the Hanaro U.S. AI Optical Communication TOP10 ETF also fell by 49.0%.
Asset managers are concerned that a prolonged decrease in net assets could weaken their revenue base. Management fees are typically calculated based on the daily net assets of the fund, meaning that if average net assets decline, so too will fee income, assuming the fee rate remains constant.
An official from an asset management firm that launched a U.S. semiconductor-related ETF stated, "There are significant concerns about data center regulations and the policy dissonance between the Trump administration and the Democrats. While individual companies are not performing poorly and their fundamentals are not bad, the overall market sentiment is quite negative, leading to widespread concerns in the industry."
* This article has been translated by AI.
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