New K-pop ETF gives investors a chance to bet on Korea’s entertainment boom
A new exchange-traded fund is trying to turn the booming Korean pop music industry into a simple business strategy for US-based investors. The KPOP and Korean Entertainment ETF, which begins trading Thursday under the symbol “KPOP,” is designed to hold stocks that trade in South Korea and could benefit from the continued international spread of the country’s entertainment industry. K-pop music has already reached the White House in the form of boy band BTS’ visit in May. The fund will be based on a bespoke “KPOP index” created by CT Investments, which is also launching the fund. The index is made up of South Korean companies in entertainment or interactive media and services, and CT Investments will use artificial intelligence to identify the companies most associated with Korean music and other forms of popular entertainment, according to the fund’s prospectus. The fund’s top holdings include entertainment giants with K-pop labels, such as Hybe and JYP Entertainment. Source: CT Investments Investors should be aware of some caveats, however. For one thing, the KPOP index designed for this fund has no public track record. And while the index is market-cap weighted, its minimum market caps translate to around $75 million in the US, meaning investors could be exposed to very small companies in the fund. Additionally, many entertainment stocks have suffered globally during this year’s stock market decline, and the fund may struggle to gain traction. This could mean that investors are seeing low liquidity in the fund, which could impact trade performance. Because the fund companies operate overseas, currency risk is another consideration for investors.
