Shinhan Asset Management's SOL Financial Holdings Plus High Dividend ETF has outperformed the Kospi even as market volatility has increased. [Provided by Shinhan Asset Management]
Shinhan Asset Management's SOL Financial Holdings Plus High Dividend ETF has outperformed the Kospi even as market volatility has increased. [Provided by Shinhan Asset Management]

Shinhan Asset Management's SOL Financial Holdings Plus High Dividend ETF has significantly outperformed the Kospi amid a recent surge in domestic market volatility, driven by strength in financial holding company stocks on the back of a favorable interest rate environment, improved earnings and shareholder return expectations.

The ETF posted a return of 8.87% over the past month, Shinhan Asset Management said Friday. During the same period, the Kospi fell 13.49%, meaning the fund's return far exceeded the broader market.

Shinhan Asset Management attributed the rally in financial stocks to a favorable interest rate environment, earnings improvement and aggressive shareholder return policies. Expectations for an improvement in net interest margins — a key profitability indicator for banks — grew as the possibility of a benchmark interest rate hike or a prolonged high-rate environment in the second half of the year gained traction. Earnings recovery at financial holding companies, along with expanded dividends and share buybacks and cancellations, also bolstered investor sentiment.

A rise in stock market trading volume has also improved earnings at securities subsidiaries' brokerage and wealth management divisions, another factor lifting financial holding company share prices. Financial holding companies are being reappraised as a sector with stable cash flows and shareholder return appeal, as they continue to expand dividends and cancel treasury shares alongside earnings improvement.

The SOL Financial Holdings Plus High Dividend ETF invests across major domestic financial holding companies, including KB Financial Group, Shinhan Financial Group, Hana Financial and Woori Financial. The product seeks to benefit from earnings improvement and expanded shareholder returns at financial holding companies, while also offering regular cash flow through monthly dividends.

Growth in the ETF market has also translated into improved earnings for the asset manager. Shinhan Asset Management's net profit in the second quarter of this year reached 35.3 billion won ($23.8 million), up 92.5% quarter-on-quarter, while first-half net profit came to 53.6 billion won, a 135.1% increase from the same period a year earlier.

"We expect volatility to be unavoidable in the second half as market skepticism over the semiconductor industry outlook persists," said Kim Jeong-hyeon, head of Shinhan Asset Management's ETF business group. "A 'barbell strategy' combining leading semiconductor stocks with defensive financial holding stocks remains effective."

He added that the SOL Financial Holdings Plus High Dividend ETF "can serve as an alternative for investors looking to complement a semiconductor-heavy portfolio while navigating a volatile market."


hajun825@heraldcorp.com