Korea Investment's ACE Japan Semiconductor ETF tops returns among Japan-focused ETFs

Korea Investment Trust Management said Monday that its ACE Japan Semiconductor ETF ranks first in both one-year and year-to-date returns among Japan-focused ETFs listed on domestic exchanges.

Korea Exchange data as of Friday's close show the ACE Japan Semiconductor ETF leading all 14 Japan-focused ETFs with a one-year return of 119.04% and a year-to-date return of 63.85%. Both figures significantly exceed the category averages of 43.59% and 22.18%, respectively, over the same periods.

The ETF invests in 25 core semiconductor companies listed in Japan and has been trading since October 2023. Its net assets currently stand at 25.3 billion won ($17.2 million). The fund is distinguished by its exposure to Kioxia — a pure-play NAND chipmaker — as well as the broader Japanese semiconductor materials, components and equipment sector.

Based on ETF Check data at Friday's closing price, the fund holds Kioxia at the highest weighting of any passive ETF listed on domestic exchanges. Kioxia is widely expected to benefit from a recent shortage in NAND supply.

The Japanese government has been channeling subsidies worth trillions of yen into state-backed chipmaker Rapidus's 2-nanometer advanced-process mass production project and the scale-up of TSMC's Kumamoto factory. This government-led infrastructure push is benefiting the semiconductor materials, components and equipment value chain within Japan.

A structural recovery in the global semiconductor industry also provides a tailwind. According to SEMI, global wafer fab equipment sales are projected to reach around $200 billion by 2028. Expanding AI workload production capacity and accelerating technology transfers are spurring investment across the semiconductor capital equipment market.

"Japan's semiconductor industry is entering a new growth phase driven by industrial restructuring, rising capital expenditure and stronger policy support," said Nam Yong-su, head of the ETF division at Korea Investment Trust Management. "As demand for next-generation AI accelerators and high-performance computing expands, equipment replacement cycles and new capacity additions are converging, and we expect earnings visibility for Japan's core semiconductor materials, components and equipment companies to improve further through the second half and beyond."

He added that the ACE Japan Semiconductor ETF holds companies with high market share in the technology-intensive materials, components and equipment segment, and that it can deliver greater portfolio benefits when combined with the broader global semiconductor lineup within the ACE ETF range.

The ACE Life Asset Shareholder Value Active ETF also posted the highest excess return relative to its benchmark among all active ETFs listed domestically over the past three months. According to Korea Exchange, the fund's three-month return as of Tuesday stood at 23.33%, outpacing its benchmark — the FnGuide Corporate Value Index, which returned minus 9.79% — by 33.12 percentage points. That is the highest benchmark-relative outperformance among 292 domestic active ETFs that have been listed for at least three months.