South Korean Asset Managers Pivot to 'Pinpoint' Semiconductor ETFs

South Korean asset managers are launching a new wave of highly specialized 'pinpoint' ETFs to target specific semiconductor niches. This shift moves the market away from broad sector indices toward granular exposure to individual products and value chains.

These specialized products are flooding the market as investors seek precision in the AI era. KB Asset Management recently launched the 'RISE Global AI NAND Memory Semiconductor' ETF, which allocates roughly 70% of its portfolio to four primary NAND firms: Samsung Electronics, SK Hynix, SanDisk, and Kioxia. Simultaneously, Hanwha Asset Management is seeking a listing for 'PLUS Korea HBM Semiconductor,' a fund focused specifically on the domestic Korean market. The trend extends to logic chips as well, with the entry of CPU-focused funds including 'KIWOOM US CPU Semiconductor TOP4+'—which features AMD and Intel—and Samsung Asset Management's 'KODEX US CPU Semiconductor TOP10.'

The Decoupling of AI Hardware

Historically, semiconductor investments were treated as a monolithic sector. However, the AI boom has decoupled the performance drivers of memory, logic, and foundry services. Industry executives note that memory chips, which previously possessed a strong commodity nature, are now establishing themselves as strategic assets. Similarly, CPUs are seeing renewed attention due to the rise of 'Agentic AI.'

This technical divergence has created a massive appetite for targeted exposure. As of August, semiconductor ETFs accounted for 31.9% of the total net asset increase in the ETF market, totaling 49.3 trillion KRW. This surge is particularly notable given that these funds represent only 8% of the total number of ETFs available.

The Search for Alpha

The proliferation of these funds suggests that 'broad beta'—simply betting on the sector's general growth—is no longer sufficient for many investors. Market participants are now seeking 'alpha' by betting on specific technical bottlenecks or winners within the semiconductor stack, such as High Bandwidth Memory (HBM), which has become critical AI infrastructure.

However, this granularity may be more cosmetic than structural. Critics point out that many of these 'pinpoint' ETFs share nearly identical top holdings, often revolving around the same giants like Samsung, SK Hynix, and Micron. This overlap suggests a potential marketing trend where different labels are applied to similar baskets of stocks, potentially misleading retail investors about their actual risk exposure and diversification.

Evaluating True Exposure

As the market fragments, experts warn that the label on the fund is less important than the actual underlying assets. Lee Sun-yeop, CEO of AFW Partners, noted that while subdividing the industry is useful, the specific stock composition must properly reflect the theme to be effective.

Investors will now be watching whether these pinpoint funds can maintain distinct performance profiles or if they will continue to move in lockstep with the broader tech giants that dominate the semiconductor landscape.