The Akros Korea Manufacturing Core Alliance Index, which the Plus Korea Manufacturing Core Alliance Index ETF (KMCA) seeks to track, is designed to measure the performance of South Korean companies across key manufacturing industries, including semiconductors, electrical equipment, nuclear energy, shipbuilding, defense, robotics and batteries. The index is implementing two changes: a rebalancing of target sector weights that raises AI Semiconductors from 40% to 60%, and a higher individual issuer cap for Samsung Electronics and SK Hynix, from 9% to 24.5% each. The details of each change and the reasoning behind them are set out below.
1. Sector Allocation Rebalancing
As part of our ongoing portfolio strategy review, the Index will adjust its target sector weights as follows:
Sector | Weight (Before) | Weight (After) |
|---|---|---|
AI Semiconductors | 40% | 60% |
Rechargeable Battery | 12% | 10% |
Shipbuilding | 12% | 5% |
Defense | 12% | 5% |
Power Grid & Nuclear Energy | 12% | 10% |
Robotics & Humanoids | 12% | 10% |
Total | 100% | 100% |
Source: Akros Korea Manufacturing Core Alliance Index Methodology
The most notable change is a significant increase in allocation to the AI Semiconductors sector (from 40% to 60%), reflecting our continued conviction in the structural growth trends driving semiconductor demand from AI infrastructure build-out. To accommodate this increase, allocations to Rechargeable Battery, Power Grid & Nuclear Energy, and Robotics & Humanoids have each been moderately reduced (12% → 10%), while Shipbuilding and Defense allocations have been reduced to 5%, each.
2. Individual Issuer Weight Cap Change
In connection with the above sector rebalancing, the Index's individual stock concentration limits for the following two constituents will also change:
Issuer | Cap (Before) | Cap (After) |
|---|---|---|
Samsung Electronics | 9% | 24.5% |
SK Hynix | 9% | 24.5% |
Source: Akros Korea Manufacturing Core Alliance Index Methodology
Previously, individual position sizes in Samsung Electronics and SK Hynix were ach capped at 9% of the index. This cap will be raised to 24.5% each, enabling the Index to more fully express its increased conviction in the AI Semiconductors sector through its two largest constituent holdings.
3. Rationale
This change is driven by the notion that both semiconductor giants represent a big portion of the Korean manufacturing industry and are beneficiaries of accelerating capital expenditure cycle in AI-related semiconductor demand and memory pricing upcycle. The index was reconstructed to capture this opportunity.
Holdings are subject to change. To view KMCA holdings, click here.>>
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Risk Disclosures:
Investing involves risk, including possible loss of principal. There is no guarantee the Fund will achieve their stated objectives. In addition to the normal risks associated with investing, international investments may involve the risk of capital loss from unfavorable fluctuation in currency values, differences in generally accepted accounting principles or social, economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. The Fund’s concentration in an industry or sector can increase the impact of, and potential losses associated with, the risks from investing in those industries/sectors.
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