Shinhan Asset Management's 'SOL Financial Holding Plus High Dividend ETF' Delivers Stable Performance Amid Market Downturn

Amid significantly increased volatility in the domestic stock market, the SOL Financial Holding Plus High Dividend Exchange Traded Fund (ETF), which is focused on investing in financial holding companies, is drawing attention for delivering stable returns even in a declining market.

According to the Korea Exchange on the 23rd, the SOL Financial Holding Plus High Dividend ETF posted a 1-month return of 8.87%. In contrast, during the same period, the KOSPI index, which saw an adjustment centered on large-cap semiconductor stocks, dropped by 13.49%, demonstrating clear outperformance. Even under strong downward pressure on the index, robust earnings and expectations for shareholder returns have supported the share price, proving the ETF's strong defensive capabilities within its portfolio.

The key drivers supporting the resilient performance of financial holding company stocks are a favorable interest rate environment and earnings momentum. With high interest rates prolonged, the net interest margin (NIM)—a core profitability indicator for banks—has remained steady as interest margins are maintained. In addition, increases in loan growth, higher brokerage fees due to increased stock trading volume, and the recovery of earnings at securities subsidiaries are all contributing factors fueling optimism for higher earnings ahead of second quarter results announcements.

Active shareholder returns are also a factor boosting investor appeal. Major domestic financial holding companies have been proactively increasing dividends and executing share buybacks and cancellations in line with the government's value-up (corporate value enhancement) policy. As a result, the shareholder return rate of leading financial holding companies—which was previously in the 20% range—has surged to as high as 40–50% recently, and further share buybacks and cancellations are expected in the second half of the year. With rising profits being directly linked to shareholder returns, the sector is being re-evaluated not just as a cyclical play, but as a representative industry offering both stable cash flow and capital gains.

The fact that valuation burdens are relatively low is also a strength. Despite recent share price increases, financial holding companies continue to trade at lower price-to-earnings ratios (PER) and price-to-book ratios (PBR) than semiconductor and certain growth sectors. Accordingly, during periods of market volatility, interest is likely to rise in value stocks that offer lower price risk relative to earnings and attractive dividend yields.

The SOL Financial Holding Plus High Dividend ETF diversifies investments among leading domestic financial holding companies with high dividends, including KB Financial Group, Shinhan Financial Group, Hana Financial Group, and Woori Financial Group. It aims to benefit from improved earnings and expanded shareholder returns at financial holding companies, while providing regular cash flow to investors through monthly dividend payments.

Kim Junghyun, Head of the ETF Business Group at Shinhan Asset Management, commented, "In the second half of the year, the market's concerns about the semiconductor industry are expected to persist, making volatility inevitable. Thus, the 'barbell strategy' of allocating portfolios to both semiconductors as the leading sector and financial holding companies as defensive stocks appears effective." He added, "The SOL Financial Holding Plus High Dividend ETF can serve as an effective alternative for investors seeking to offset semiconductor-centric portfolios and respond to market volatility."

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