FLKR: Better Than EWY, But Political Shenanigans Make This A Risky Bet
FLKR and EWY are the two offerings that investors can pursue if they are looking for unlevered ETF products that cover South Korean equities. We highlight why the former is the better choice of the two. South Korea is in the throes of major political upheaval while the Trump administration could levy some unsavory surprises on Korea's exports which account for 44% of GDP.
FLKR: Risk-Reward Profile Not Attractive
Franklin FTSE South Korea ETF has a high exposure to the volatile memory sector, making it susceptible to economic downturns and cyclical fluctuations. The fund's technology sector concentration is overly reliant on Samsung Electronics and SK hynix, increasing its vulnerability to memory chip supply-demand imbalances. Despite its attractive valuation, FLKR's prospects are dimmed by South Korea's weak economic outlook and the depreciating Korean Won.
FLKR: A Good Fund For South Korean Exposure
South Korea is a bright spot in East Asia with booming exports and a proactive government encouraging small business startups. The Franklin FTSE South Korea ETF provides broad exposure to the South Korean equity market, with a focus on leading companies like Samsung Electronics. The fund has a heavy allocation in the Tech sector, which may pose risks, but offers potential for long-term growth in a thriving economy.
