Hi Bill,
We have touched on the Korean KOSPI and semiconductors that currently dominate a number of Asian ETFs, including the ASX-traded ASIA ETF, a few times in recent weeks. For subscribers not familiar with the BetaShares Asian Technology Tigers ETF (ASIA) it can be summarised as follows:
- A $1.6bn currency hedged ETF, that costs 0.67% pa, and currently holds: ~46% in semiconductors and ~30% in Tech Hardware stocks with Taiwan Semiconductors (9%) and MediaTek (7%) the largest two holdings.
The ASIA ETF actually plunged ~7% on Friday so were not 100% sure which ETF you’re referring to but they are generally moving as one, albeit with a varying Beta (volatility).
- Firstly, after surging 2.5x from its 2025 low volatile pullbacks are almost inevitable as investors & speculators question if the AI buildout will continue at its unprecedented rate.
- Secondly, at MM we’re still “Buyers of the Dip” but the higher it/they go the greater the volatility is likely to become.
At this stage our ideal entry into the ASIA ETF is around the $20 area but we are conscious that its corrected ~$2.90 twice in the last 12-months and markets do like to rhyme.
- To answer your specific question here the volatility is coming from sentiment/momentum swings – there is a lot of trend following money in this area of the market right now that will amplify both upside and downside moves. Systematic/quant traders react to price, and when a market/stock/ETF has a lot of them, the price swings after a strong run can be significant, especially when leverage is involved, as is the case in some of the ETFs exposed to this theme.
- We like the theme but can envisage very high levels of volatility continuing to play out is this space. It is a very high risk area in MM’s view.
