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DS Asset Management opens its AI chip ETF with 30% in Samsung and SK hynix
The Korean manager's second ETF lists next month with SK hynix and Samsung Electronics at 15% apiece, half the 60% it must keep in domestic stocks. The discretion it is selling sits in the eight suppliers around them.
The Investor · Invest desk
What happened
- DS Asset Management plans to launch the DS AI Semiconductor Active ETF next month, its second ETF, with more than 60% of assets in stocks listed on Korea's KOSPI and KOSDAQ markets.
- In the early stage after listing, SK hynix and Samsung Electronics each carry the largest weighting at 15%, alongside Isu Petasys, Samsung Electro-Mechanics, SK Square, Wonik IPS, HPSP, ISC, Hana Micron and Soulbrain.
- The stated core strategy is to adjust the weighting of the two integrated chipmakers with semiconductor industry conditions and investment cycles, and to rotate leaders on earnings, new listings and thematic trends.
- Rival AI chip active ETFs name their subsector in the product title, memory, non-memory, or materials, components and equipment; DS left subsectors out to keep its investment scope adjustable.
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Why it matters
- constraint With 30 of the mandatory 60 domestic percentage points committed to two names, the manager's room to differ from a cap-weighted basket is the remaining domestic allocation plus a non-Korean sleeve capped at 40%.
- decision A Korean buyer choosing between the subsector-labelled funds and this one is deciding whether to delegate the memory-versus-equipment split to a manager or size it themselves.
- exposure Holders take on whatever the manager decides the cycle is doing between disclosures, since the product name does not bound how far the fund can move from memory into equipment or data centre infrastructure.
- precedent If the unlabelled format gathers assets, the next Korean AI chip launch has a template for leaving the boundary between memory, suppliers and infrastructure open in the prospectus instead of the title.
Fifteen plus fifteen is thirty [15], and since the fund has to keep more than 60% of assets in KOSPI and KOSDAQ listings [3], the two integrated chipmakers take half of that domestic floor before the manager exercises any judgement at all [16].
The judgement sits in what is left. Because the 60% is a minimum, at most 40% can go outside Korean listings [19], and the launch portfolio lists eight other holdings: Isu Petasys, Samsung Electro-Mechanics, SK Square, Wonik IPS, HPSP, ISC, Hana Micron and Soulbrain [12][18]. Those eight, plus whatever server, power grid and network exposure gets added as data centres expand [7], are where the fund's return will differ from the 30% it starts with.
The naming choice is the more interesting term. Competing active products in this category put the subsector in the product name, memory, non-memory, or materials, components and equipment [9], and DS left the label off, which the report describes as a way to adjust the investment scope flexibly as market conditions and technology change [10]. A subsector label is what lets a buyer size the position against what they already hold. Without one, the split between memory and equipment inside this fund is set by the manager in step with earnings announcements, new listings and thematic trends [8], and disclosed after the fact.
DS entered the ETF market in July, and is regarded as a leading private fund manager in Korea [13]. That is roughly two months of listed record as of the 20th [22]. The one number on it is the DS KOSDAQ Active ETF, which returned 4.99% from Aug. 19 to Sept. 18 and beat its benchmark by 5.86 percentage points [14], so the benchmark lost 0.87% over the same month [17]. One month of relative return says very little about process. The report does not disclose the new fund's fee, ticker or target size [21].
The firm's first product was a KOSDAQ fund [2]. The follow-up goes to the two largest domestic chipmakers in a category where rival active products already trade [9].
Suppose memory pricing holds through the launch window: the 15-and-15 anchor drives most of the return, and the rotation into equipment and infrastructure names is noise around it. If the cycle turns, the case for the active fee is the front-end, back-end and test supplier book [5], where the fund says it wants to find differentiated technology or improving earnings early [6]. In my view the opening weights are close enough to a cap-weighted domestic semis basket that the mandate will look expensive for its first year; the counter is that a manager permitted to move Samsung and SK hynix with industry conditions [4] only proves its worth when memory rolls over, and nobody gets evidence either way until it does.
The test is the first portfolio disclosed after a memory earnings quarter. If SK hynix and Samsung Electronics are still at 15% each, this is a basket with a manager attached. At 8 and 20, the rotation is real.
What to watch
- The first portfolio disclosed after listing, and whether SK hynix and Samsung Electronics stay at 15% each or move apart.
- Whether the fund uses its full 40% non-Korean allowance, and on which infrastructure or foreign chip names.
- Whether the DS KOSDAQ Active ETF's 5.86 percentage point lead over its benchmark survives a second month.