SKOR: Small-Cap Korean Stocks Get Their First ETF

April 15, 2010 by  
Filed under Commentary, ETF IPOs (New ETFs), ETFs

Following on last month’s launch of ETFs covering Australian and Canadian small-caps, IndexIQ yesterday (4/14/10) marked more territory with the introduction of IQ South Korea Small Cap ETF (SKOR).  If Korea continues to grow, SKOR could prove to be a winner.

Like the other IndexIQ single-country small cap ETFs, SKOR will follow a custom index consisting of 100 stocks, capitalization-weighted with a maximum allocation of 10% at quarterly rebalancing.  Index stocks must have a minimum market capitalization of $150 million and average daily trading volume of $1 million.  Of course they must be domiciled and primarily listed on an exchange in South Korea.

The top holdings in SKOR are:

  • Hotel Shilla Co Ltd (2.9%)
  • Daum Communications (2.6%)
  • Meritz Fire & Marine Insurance (2.6%)
  • Poongsan Corp. (2.6%)
  • Daishin Securities (2.5%)

I must confess to being unfamiliar with any of these companies.  Presumably they are well-known to people who invest in Korean small-caps.  As far as I can tell, none trade on U.S. exchanges.  This is, of course, the point of any ETF: giving investors a way to invest in a niche portfolio without the need to research individual stocks.

IndexIQ has several more small-cap funds on the drawing board, including Taiwan, Hong Kong, Singapore, Indonesia, Malaysia, and Thailand.  All are on the periphery of China and therefore highly dependent on Chinese economic growth.

For more information, visit the SKOR summary page at the Index IQ site.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

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