K-Pop ETF Fund to Be Closed... Shutting Down After 4 Years Due to Weak Music Sales

An exchange-traded fund (ETF) that bet on the growth potential of the K-Pop industry is finally closing its doors amid weak music sales. Last year, South Korean album sales dropped by 19% for the first time in nine years of consecutive growth, revealing an industry downturn independent of Hallyu’s global popularity. The “Jakota KPOP & Korean Entertainment ETF” (KPOP), launched in August 2022, is scheduled to cease trading on April 1. According to a filing with the U.S. Securities and Exchange Commission (SEC), the fund’s value has fallen by over 40% since its peak in February 2023, and it currently holds only $1.4 million in assets. Net inflows into the fund since its inception amounted to just $2.3 million. KPOP ETF tracked Korean entertainment companies whose performance reflected the activities of globally popular artists such as BTS and BLACKPINK. SM Entertainment was the largest holding in the fund, accounting for about 12%, but this did not prevent the fund’s value from declining despite the South Korean stock market rising by 21% during the same period. The weakness in South Korea’s album industry proved to be a decisive factor. Last year, album sales in South Korea dropped by 19% compared to the previous year, marking the first decline that ended nine years of continuous growth starting in 2015. U.S. consumers spent $291.8 million on K-Pop albums. A similar music industry-tracking fund, the “Clouty Tune ETF” (TUNE), was closed just 10 months after its launch in November 2023. Exchange Traded Concepts, the operator of KPOP ETF, manages $4.4 billion across 38 ETFs in total, while the music industry index-tracking fund MUSQ ($22.4 million) has remained almost unchanged over the past three months.