ETC’s CEO Garrett Stevens joins Seoul Economic TV’s Kim Bo-yeon to discuss opportunities for Korean asset managers to leverage U.S.-listed ETFs to access greater economies of scale.
Kim Bo-yeon:
As the status of K-Defense rises, an ETF comprised of domestic defense industry companies is scheduled to be listed soon on the New York Stock Exchange (NYSE). This is expected to have the effect of attracting more overseas funds to our companies as a bridgehead. Today, we will meet with the CEO of ETC (Exchange Traded Concepts), a private label ETF platform operator in the U.S. that collaborated on this ETF. We will hear his advice on the Korean ETF market.
Garrett Stevens:
One of the reasons we work with Korean companies is to introduce new ideas to the market, things that other people in the U.S. haven't come up with. It's different ideas and exposure to differentiated product types, which we've seen a real demand for and have not yet been proposed in the U.S. We just filed some new funds as well, one of which is a Korean defense ETF. There are many very exciting products in the marketplace.
In an interview with Seoul Economic TV held in Yeouido, Seoul, Garrett Stevens, CEO of ETC, said,
"Bringing new products from Korean firms to the U.S. market, that U.S. investors currently don’t have available to them, would be interesting to U.S. investors and represent a growth opportunity for Korean firms."
ETC is a company founded by Garrett Stevens in 2011 that provides comprehensive services to help small and medium-sized U.S. and overseas asset management companies list and manage ETFs on U.S. exchanges. Currently, ETC operates 68 ETFs in the U.S., with assets under management of around $7.4 billion (KRW 10.3215 trillion) as of 11/01/2024.
ETC is working with Hanwha Asset Management to list an ETF comprised of domestic defense industry companies on the NYSE. It is likely that stocks such as Hanwha Aerospace, Hyundai Rotem, Korea Aerospace, Hanwha Ocean, and LIG Nex1 will be included. As a white label ETF issuer, ETC helped Hanwha Asset Management bring its ideas to the U.S. market.
Garrett Stevens:
ETC has the regulatory infrastructure and the licensing from the U.S. Securities and Exchange Commission (SEC) that's required, so we can get our clients' ideas to the market very quickly and inexpensively compared to trying to do it yourself and set up all of the infrastructure- such as the board of directors, auditors, accountants, and tax work. We even build custom websites for our clients that meet all of the U.S. regulatory requirements for daily holdings, premium and discount, and additional regulatory items. ETC will handle all aspects of the fund launch from initial filings to ongoing operations, trading, and portfolio management.
The advantage of launching in the U.S. is definitely the scale. Korea's ETF asset size is about 160 trillion won, while the U.S. stock ETF market size is about 10 trillion dollars (1400 trillion won).
Garrett Stevens:
(The advantage of launching in the U.S.) is the scale of the market. There are many investors and huge amounts of money being invested in the U.S.
In terms of asset size, the U.S. is 87.5 times larger than Korea, but in terms of the number of ETFs, there is not much difference. There are about 900 listed in the Korean market and 3,800 in the U.S. In terms of quickly releasing new products, he elaborated that the Korean ETF market appears to be growing very quickly.
Garrett Stevens:
"(Korea's) future growth potential that it has shown over the past few years and the trajectory for more growth in the future is a very interesting factor for many investors."
CEO Stevens highlighted liquidity constraints as the primary challenge facing the Korean stock market. If investor interest wanes, liquidity could further decline, shrinking the market’s appeal. By consistently launching Korean ETFs on U.S.-based exchanges with high liquidity, Korean asset managers can drive renewed interest, attract foreign investors, and potentially increase trading volume. This potential influx of activity could generate a virtuous cycle of enhanced liquidity and sustained market growth.
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