- What is the Equity Product Market?
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The KRX equity product market is a place where a variety of securities products, which are different from stocks and bonds, are traded in the same manner as stocks. The equity products that are being traded currently are ETFs, ETNs and ELWs. In the Financial Investment Services and Capital Markets Act, ETFs are classified as collective investment securities, while ETNs and ELWs as derivatives-linked securities.
- ETFs (Exchange Traded Funds)
ETFs are investment funds of which return ratio is linked to the movement of particular index such as KOSPI200 and prices of particular assets. They are listed on the exchange and traded much like stocks.
As in the case of index funds, diversified investment in small value can be made for ETFs. Also, ETFs are excellent investment products since they can be traded on a real-time basis like individual stocks and boast operational transparency as well as low management fees.
- ETNs (Exchange Traded Notes)
ETNs are derivatives-linked securities which are issued by securities firms under the agreed terms that they will pay a certain amount of return upon maturity by linking it with the movement of the return ratio of underlying assets, and they are listed and traded on the exchange like stocks.
ETNs have simpler issuance procedure than ETFs and various and creative investment strategies can be implemented for ETNs since no particular restriction is imposed on the asset management of ETNs. In addition, ETNs have strength in diversified investment, trading convenience, low cost, etc as in the case of ETFs.
- ELWs (Equity Linked Warrants)
ELWs are the securities that entitle the holder to purchase or sell the underlying assets, such as stocks and stock price indices, at a pre-determined period of time in the future.
ELWs have the same economic effect as options do because various investment strategies such as risk hedging can be implemented by utilizing the leverage effect, but ELWs are differentiated from options in a sense that they do not require the margin deposit and can be traded in small value.