Hanwha Asset Management launches US alternative investment ETF

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Kim Sung-hoon, head of ETF Strategy & Business Development at Hanwha Asset Management, poses before a press conference at its headquarters in Seoul, Wednesday. Courtesy of Hanwha Asset Management.

By Lee Min-hyung

Hanwha Asset Management has launched an exchange-traded fund (ETF) of alternative investments in the U.S., allowing investors to diversify their asset portfolios in a more stable manner amid growing inflationary pressure, the company said Wednesday.

The ARIRANG U.S. alternative investment Top 10 MV ETF features investments in major U.S. listed companies that focus on alternative investments ― such as the global top three private equity firms (PEFs), Blackstone, KKR and Carlyle. The portfolio of the ETF also includes international alternative investment firms, including Apollo Global Management and Brookfield Asset Management, the Hanwha affiliate said.

The companies in the portfolio focus on alternative investments, with more than 75 percent of their sales or managed assets coming from the alternative asset class.

Alternative investments refer to investments in non-conventional asset classes rather than stocks, bonds or cash. Alternative investments include: hedge funds, private capital, real estate, infrastructure and raw materials.

Alternative investments are emerging as a promising area to hedge risks from the growing inflationary pressure and financial uncertainties here and abroad. The Korean economy is also feared to encounter stagflation, with this year’s GDP growth forecast at less than three percent. Coupled with external uncertainties such as the U.S. Federal Reserve’s aggressive rate hikes, consumer prices here are also rising at an alarming pace each month.

The ETF product from the Hanwha subsidiary will allow retail investors to make alternative investments and stably diversify their asset portfolios in this period of economic slowdown, the company said.

Alternative investments have long been considered a market for institutional investors due to their relatively huge amounts of capital, but any retail investor who wants to invest in the area can do so through the latest ETF from the company.

“It is a great investment strategy for retail investors to widen their investment portfolios into alternative asset amid the escalating woes over the economic slowdown and inflation,” Kim Sung-hoon, the head of ETF Strategy & Business Development at Hanwha Asset Management, told reporters during a press conference.

“Alternative investments are typically longer-term investments than conventional ones, but the former are widely expected to generate higher and more stable returns than the latter,” he said.

The company also underscored that it was the first time that a local asset management company has launched a comprehensive alternative investment ETF encompassing not just PEFs, but venture capital firms and business development companies.