IndexIQ, a developer of index-based alternative investment solutions, is introducing the IQ South Korea Small Cap ETF focusing on the domestic market of South Korea.
The fund seeks to replicate, before fees and expenses, the performance of the IQ South Korea Small Cap Index.
The market capitalisation-weighted index is intended to give investors a means of tracking the overall performance of the small capitalisation sector of publicly traded companies domiciled and primarily listed on an exchange in South Korea.
The fund is designed to provide additional alpha exposure as a satellite holding built around an investor’s core equity portfolio.
"Investors targeting South Korea typically have been required to invest in funds with broad-based exposure to large cap and global companies domiciled or operating in this market," says Adam Patti, chief executive officer at IndexIQ. "However, the South Korean economy has its own important dynamics, which are perhaps best captured thorough small capitalisation companies. The growth of South Korea’s economy has been driven by a robust domestic consumer-class, coupled with an export-driven trade platform, a high-growth technology sector, and the unique status as one of the world’s most innovative countries."
To be included in the index, companies must have a minimum average market capitalisation of USD150m for the prior 90-day period; the average maximum capitalisation must be equal to the bottom 15 per cent ranking of companies in South Korea based on the prior 90 days.
Stocks are required to have a minimum average daily trading volume of at least USD1m for the prior 90 days, and a minimum monthly volume of 250,000 shares for the prior six months.