DS Asset Management Launches Active AI Chip ETF
The new fund covers the full AI supply chain, from memory makers to data center infrastructure, with Samsung and SK hynix as top holdings.
Key points
- DS Asset Management launches an AI chip ETF covering the full supply chain, including memory and infrastructure.
- Samsung Electronics and SK hynix will each hold a 15% weight in the initial portfolio.
- The fund uses an active rotation strategy to adjust holdings based on earnings and industry cycles.
DS Asset Management is set to launch an actively managed exchange-traded fund focused on the artificial intelligence chip sector next month. This product marks the firm’s second entry into the ETF market, following the debut of its KOSDAQ active fund earlier this year. The new vehicle aims to capture value across the entire AI hardware ecosystem rather than targeting a single component.
According to reports from sedaily.com, the fund will allocate more than 60% of its assets to companies listed on Korea’s KOSPI and KOSDAQ exchanges. The portfolio will include integrated chipmakers, memory specialists, and suppliers of materials and equipment. By taking an active approach, the fund seeks to adjust holdings dynamically in response to industry cycles and technological shifts.
Broad Scope Includes Infrastructure
Unlike many competitors that label their funds by specific sub-sectors like memory or non-memory chips, this product uses a broader name. This allows the fund manager to include infrastructure companies involved in servers, power grids, and network systems. As AI data centers expand, the demand for supporting infrastructure grows, creating a larger addressable market for investors.
The strategy involves rotating positions based on earnings announcements and supply-demand changes. The fund may also hold companies with differentiated technologies that are positioned to benefit from industry transitions. This flexibility is intended to capture opportunities that narrowly focused funds might miss.
Major Holdings Lead Portfolio
In the initial phase after listing, Samsung Electronics and SK hynix are expected to hold the largest individual weights at 15% each. These two companies are central to the global memory chip supply chain, particularly in high-bandwidth memory used for AI processors. Other notable holdings include Isu Petasys, Samsung Electro-Mechanics, and SK Square.
The fund will also include smaller suppliers such as Wonik IPS, HPSP, ISC, Hana Micron, and Soulbrain. These companies provide critical components and services in the front-end, back-end, and testing processes of chip manufacturing. By diversifying across the value chain, the fund aims to mitigate the risk associated with relying on a few large manufacturers.
Performance Context and Trade-offs
DS Asset Management entered the ETF market in July with its KOSDAQ active fund. That product returned 4.99% over the past month, outperforming its benchmark by 5.86 percentage points. However, active management comes with higher fees and potential tracking errors compared to passive index funds. Investors must weigh the potential for outperformance against the cost and the skill required to pick the right stocks at the right time.
The AI chip sector is currently experiencing high volatility due to rapid technological changes and intense competition. While the active strategy offers flexibility, it also exposes investors to the risk of misjudging market trends. The fund’s success will depend on its ability to navigate these shifts and identify companies that sustain growth over the long term.
