The Korea Exchange introduced new ETFs and a futures market for those funds based on the KRX 300 Index on March 26. Kosdaq venture funds were put on the market Feb. 5. Financial investment sources said those funds are sure to boost the trading volume on the Kosdaq market.
A number of renowned securities agencies joined the ETF market, including Kium Asset Management, Dongbu Asset Management and Hana UBS Asset Management, along with 13 others.
The number of shares listed on the ETF market numbered 135, with 29 listed in 2012, which is the most in Asia. Japan has 130, followed by Hong Kong (100) and Singapore (99).
The dividends declared by the listed firms in the securities and Kospi markets last year totaled 23 trillion won, the largest in history of the stock market in Korea.
The Korea Exchange found out that 537 firms (72.1 %) out of the 745 listed firms in the securities market paid dividends last year while the listed firms in the Kospi market paid 21.808,5 trillion won in dividends, up 858.9 billion won from the preceding year. 544 firms in the Kosdaq market paid dividends totaling 1.408,2 trillion won, also.
The KRX said the number of firms paying dividends increased every year since 2013.
The KRX recently hosted a session for pension funds, organizations and individual investors to boost the understanding of ETF products and explain the advantages associated with them, as well as the asset management strategy.
The ETF market, since its opening in 2002, saw its value expand to more than 15 trillion won ,with listed shares numbering 135 and its global position upgraded to be among the global top 10 markets.
Exchange Traded Funds boast many advantages. On the one hand, they provide great flexibility in buying and selling. It is easy for you to sell and buy them at the actual market price any time during a trading day, in contrast to mutual funds that you can only acquire at a trading day’s conclusion. Since they are companies that trade like stocks, you can buy them in margin accounts and sell them short, meaning that they can be used for hedging purposes too.
ETF’s also allow limit orders and stop loss orders, which are helpful for assuring entry prices and protecting profits or safeguarding from losses.
ETF’s also provide lower costs for traders. This results from the majority of ETF’s not being actively managed. Also, ETF’s do not spend large amounts of money on distribution, marketing, and accounting costs.
The majority do not have the fees associated with most mutual funds either.
ETF’s are among the greatest vehicles for diversifying portfolios quickly and easily. As an example, with only one set of shares, you can “own” the entire S&P 500 index. ETF’s will give you exposure to country specific indexes, international markets, commodities, and even bond indexes.
ETF’s have two other advantages. They are both transparent and tax efficient.
Transparent in this regard means that they are clear in their portfolio holdings and are priced all day long. They are tax efficient as they do not create many capital gains, since they are not in the business of buying and selling their underlying indexes.
They also are not required to sell their holding to meet redemptions of investors.