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Korea Investment Management partners with Solactive for income ETF launch


Solactive writes that amidst the market’s unpredictability and recent economic headwinds caused by monetary tightening amongst other things, investors are increasingly seeking stability and income-generating opportunities. 

“A potential solution to this challenging market condition is a high income focused balanced approach consisting of equity and fixed income exposures. High dividend paying companies are typically more mature businesses with strong financials and thus can provide protection against volatility, while rising interest rates have caused yields of fixed income securities to become more attractive again.” 

In response to this, Solactive has announced its collaboration with Korea Investment Management (KIM) to introduce the Solactive Global Superior Income Top 10 Index, tracked by the ACE Global Income TOP10 Solactive ETF. 

The ETF was listed on the Korea Stock Exchange under code 460960.KS, and allows investors to efficiently access this solution, the firm says.

The Solactive Global Superior Income Top 10 Index provides a well-diversified investment opportunity that consists of 50 per cent equity and 50 per cent fixed income exposures, represented by ETFs listed on US exchanges. The ETFs within each asset class are selected and weighted based on their dividend yields, while excluding ETFs with less than three years of dividend payment history to ensure a degree of consistency. The index also explicitly excludes specific types of ETPs such as leveraged & inverse ETFs, ETNs, PTPs, BDCs, FOFs, active ETFs, and others, to enhance transparency and mitigate potential risks associated with some of these, according to the firm.

Timo Pfeiffer, Chief Markets Officer at Solactive, says: “The possible risk-adjusted return advantages of allocating one’s investments across stocks and bonds have been understood for a very long time. Combining this type of diversification with earning high income can be particularly attractive in today’s higher interest rate environment – but also beyond, for example in the context of retirement planning. Through regular rebalancing, the index is allowed to adapt to changing environments and keeps selecting high yielding securities, while diversification helps investors reduce their exposure to market volatility. We highly appreciate KIM’s continued trust in our partnership and are excited about this next engagement with them, jointly introducing another innovative product to South Korean investors.”

Yongsoo Nam, Managing Director and Head of ETF Management at Korea Investment Management, says: “With the increasing market uncertainty, there is a growing demand for products that offer consistent income. The ACE Global Income TOP10 SOLACTIVE ETF is specifically designed to meet this demand by providing stable income from high-dividend ETFs, in addition to investment returns. We believe this ETF can be an attractive tool for investors seeking a cash flow-oriented strategy while aiming for returns from balanced portfolios.”

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