[Finance Barometer] Worried About Semiconductors? "Hyundai Motor ETF" Heats Up with Physical AI

Three Hyundai Motor ETFs Launched in June
"Hyundai Motor to Lead the Physical AI Era"
Differences in Constituents, Fees, and Taxation

Exchange-traded funds (ETFs) that have been fueling the domestic stock market are now focusing on Hyundai Motor Group. This year, after products bundling Samsung Electronics and SK hynix enjoyed massive popularity, and amid concerns about a potential semiconductor peak, Hyundai Motor Group is emerging as the next hot theme for ETFs.

According to the Korea Exchange on June 11, three ETFs that list Hyundai Motor as a major holding have been listed one after another this month. Following the launch of "WON Samsung Electronics Hyundai Motor Bond Mix 50" on June 2, "KODEX Hyundai Motor Robotics Value Chain TOP3 Plus" and "1Q Hyundai Motor Kia Bond Mix 50" were launched on June 9. "RISE Hyundai Motor Fixed Physical AI," which was listed on May 12, surpassed 700 billion won in net assets in about one month after its listing.

Asset management companies are concentrating on Hyundai Motor because "physical artificial intelligence (AI)" is drawing attention as the next market-driving theme after semiconductors. Hyundai Motor acquired Boston Dynamics, a robotics specialist, in 2021. "HMG Global," funded by Hyundai Motor, Kia, and Hyundai Mobis, owns about 56% of Boston Dynamics; Euisun Chung, Executive Chair of Hyundai Motor Group, holds over 20%; and Hyundai Glovis owns around 10%.

The market expects Hyundai Motor’s Boston Dynamics to become a leading company in the physical AI space. Eunyoung Lim, a researcher at Samsung Securities, said, “The automotive industry creates significant upstream and downstream employment, so it receives government protection and is not typically an oligopoly in other countries. However, in the era of physical AI, we expect two or three companies capable of attracting massive capital and talent to dominate the market in an oligopolistic structure. In the West, after Tesla, Hyundai Motor and Kia are strong contenders.”

Some analysts say Boston Dynamics’ "Atlas," backed by Hyundai Motor's large-scale manufacturing capabilities, is positioned to outperform Tesla in the market. Moonsu Jang, a researcher at Hyundai Motor Securities, noted, “If you look at humanoid robot companies, only a few have large-scale capital to mass-produce robots. Most companies have no experience in large-scale manufacturing. Boston Dynamics, backed by Hyundai Motor Group, which has a history and capacity for mass production exceeding 8 million units, is in a unique position.” He also emphasized, “In terms of production volume, Hyundai Motor has about five times more manufacturing data to train robots than Tesla.”

While all these ETFs focus on growth potential, each product has its own characteristics. "KODEX Hyundai Motor Robotics Value Chain TOP3 Plus" invests up to 25% each in Hyundai Motor, Kia, and Hyundai Mobis—the three core companies in the group’s robotics value chain—resulting in at least 75% concentrated investment. Hyundai Autoever, the group’s core robotics affiliate, is included at 8.62%, and Hyundai Glovis, which holds a stake in Boston Dynamics, at 5.62%. Notably, if Boston Dynamics goes public in the future, the ETF is designed to allow for a special allocation of up to 25%.

"RISE Hyundai Motor Fixed Physical AI" focuses on Hyundai Motor at 25%, and invests in 14 other stocks with high similarity scores to physical AI, covering autonomous driving, robotics, and factory automation. The ETF uses market capitalization weighting, but limits the maximum allocation per stock to 15% to mitigate concentration risk. As of June 10, its holdings consisted of Hyundai Motor (24.64%), Hyundai Mobis (15.72%), LG Innotek (14.74%), and Kia (12.45%).

"1Q Hyundai Motor Kia Bond Mix 50" allocates 25% each to Hyundai Motor and Kia, and invests the remaining 50% in short-term government and public bonds. The strategy is to pursue growth through investments in Hyundai Motor Group while supplementing stability with bonds. In addition, this product is not subject to the 70% risk asset limit for retirement pension accounts, so it can be included up to 100% in retirement pension (DC and IRP) accounts. If investors allocate up to 70% in other equity ETFs and invest in this product in parallel, the equity exposure within a retirement pension account can be increased to a maximum of 85%.

"WON Samsung Electronics Hyundai Motor Bond Mix 50" views physical AI—the "body"—as Hyundai Motor, and memory/semiconductors—the "brain"—as Samsung Electronics. The ETF allocates 25% each to Hyundai Motor and Samsung Electronics, and 50% to short-term bonds. This product is also classified as a safe asset in retirement pension accounts, allowing for 100% full allocation.

In addition, "TIGER Hyundai Motor Group Plus," listed in 2011, invests in major affiliates of Hyundai Motor Group. As of the latest holdings, Hyundai Motor accounts for 35.1%, Kia for 21.7%, Hyundai Mobis for 16.3%, Hyundai Steel for 6.7%, and Hyundai Engineering & Construction for 4.3%.

As of June 9, "TIGER Hyundai Motor Group Plus" had the largest net asset value at 935.9 billion won, followed by "RISE Hyundai Motor Fixed Physical AI" at 737.4 billion won, "KODEX Hyundai Motor Robotics Value Chain TOP3" at 110.1 billion won, "WON Samsung Electronics Hyundai Motor Bond Mix 50" at 21 billion won, and "1Q Hyundai Motor Kia Bond Mix 50" at 11.5 billion won.

In terms of total expense ratio, "1Q Hyundai Motor Kia Bond Mix 50" is the lowest at 0.10% per year, followed by "TIGER Hyundai Motor Group Plus" at 0.15%, "WON Samsung Electronics Hyundai Motor Bond Mix 50" at 0.18%, "RISE Hyundai Motor Fixed Physical AI" at 0.40%, and "KODEX Hyundai Motor Robotics Value Chain TOP3 Plus" at 0.50%.

Taxation also varies by product. "TIGER Hyundai Motor Group Plus" and "RISE Hyundai Motor Fixed Physical AI" are classified as domestic equity ETFs and are exempt from capital gains tax on trading profits. However, dividend income is subject to a 15.4% dividend income tax. "1Q Hyundai Motor Kia Bond Mix 50" and "WON Samsung Electronics Hyundai Motor Bond Mix 50" are bond-mixed ETFs, while "KODEX Hyundai Motor Robotics Value Chain TOP3 Plus" is an ETF including overseas stocks, so capital gains are taxed at 15.4% during the holding period. As of June 9, the portion of overseas stocks in "KODEX Hyundai Motor Robotics Value Chain TOP3 Plus" was 1.87% for NVIDIA and 1.17% for Alphabet, and capital gains tax is applied to these portions.

This content was produced with the assistance of AI translation services.