Two South Korea ETFs Offer Exposure to Economy That May Rebound

EWY, FLKR hold large- and mid-cap Korean companies

Learn more about the small yet growing number of South Korea ETFs, which track the often forgotten Asian Tiger responsible for Samsung, Kia and Hyundai.
South Korea ETFs.

For investors optimistic that South Korea will rebound from its pandemic-era slump, the iShares MSCI South Korea and Franklin FTSE South Korea exchange-traded funds (ETFs) offer broad exposure to one of Asia's largest economies.

The funds, which underperformed benchmark indexes this year, hold shares of large- and mid-cap South Korean companies. The nation's economy is expected to keep expanding this year and next after shrinking during the pandemic.

Key Takeaways

  • The two South Korea ETFs that trade in the U.S. are the iShares MSCI South Korea ETF and the Franklin FTSE South Korea ETF.
  • These funds give investors exposure to one of Asia's largest economies.
  • The South Korean economy is expected to expand this year and in 2023 after growing at the fastest rate in more than a decade in 2021.

The funds are the only U.S.-traded ETFs focused on South Korea, excluding inverse and leveraged funds and those with under $50 million in assets under management (AUM). The MSCI Korea Index, fell 33% in the past 12 months, compared with the 18% drop in the S&P 500 Index as of Nov. 4.

We look in more detail below at these two funds below. All the numbers are as of Nov. 7.

iShares MSCI South Korea ETF (EWY)

  • Performance Over One Year: -29.7%
  • Expense Ratio: 0.57%
  • Annual Dividend Yield: 0.80%
  • Three-Month Average Daily Volume: 3,360,589
  • Assets Under Management: $2.7 billion
  • Inception Date: May 9, 2000
  • Issuer: BlackRock Financial Management

EWY tracks the MSCI Korea 25/50 Index, which gauges the overall performance of the mid-cap and large-cap segments of the South Korean stock market. The fund follows a value-based investing strategy and may appeal to investors seeking a short-term position in the South Korean market or targeted international equity exposure.

Over 36% of EWY's holdings are allocated to the information technology (IT) sector. Industrials receives the next largest weighting, at about 11.4%, followed by materials stocks at 10.7%. EWY's largest holdings are Samsung Electronics Co. (005930:KRX), a manufacturer of consumer and industrial electronic equipment and products, which represents over 23% of EWY's portfolio; SK Hynix Inc. (000660:KRX), a maker of semiconductor products; and Samsung SDI Co. Ltd (006400:KRX), a battery and electronic materials maker.

Franklin FTSE South Korea ETF (FLKR)

  • Performance Over One Year: -31.5%
  • Expense Ratio: 0.09%
  • Annual Dividend Yield: 1.75%
  • Three-Month Average Daily Volume: 20,079
  • Assets Under Management: $51.7 million
  • Inception Date: Nov. 2, 2017
  • Issuer: Franklin Templeton

FLKR tracks the FTSE South Korea Capped Index, a market capitalization-weighted index composed of mid-cap and large-cap companies. The ETF focuses on value stocks and is weighted toward large caps.

Almost 35% of the fund's holdings are allocated to the IT sector, followed by industrials and consumer discretionary. One attraction of FLKR is its low expense ratio, enabling direct access to South Korean equities at a low price compared with alternatives. Its top three holdings are Samsung Electronics, SK Hynix, and Samsung SDI, all described above.

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Article Sources
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  1. OECD. "Korea Economic Snapshot."

  2. The World Bank, World Bank Open Data. “GDP (Current US$) — Korea, Rep.

  3. The Korea Economic Daily. "S. Korea's Economic Growth Jumps to 11-Year High."

  4. YCharts. “Financial Data.”

  5. VettaFi. “ETF Screener.”

  6. MSCI. “MSCI Korea 25/50 Index (USD),” Page 1.

  7. VettaFi. “EWF: iShares MSCI South Korea ETF.”

  8. iShares. “EWY: iShares MSCI South Korea ETF.”

  9. VettaFi. “EWY: iShares MSCI South Korea ETF: Holdings.”

  10. Franklin Templeton. “FLKR: Franklin FTSE South Korea ETF: Portfolio.”

  11. VettaFi. “FLKR: Franklin FTSE South Korea ETF.”

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