By Kim Bo-eun
Samsung Asset Management is embroiled in lawsuits with investors of its West Texas Intermediate (WTI) exchange-traded fund (ETF), over the investment firm's changes in the composition of the fund which investors state have caused them losses.
A group of 220 investors of Samsung's KODEX WTI ETF filed a compensation suit against the asset managing firm, Thursday. This comes after two investors filed a suit with the Seoul Central Court on the same grounds on April 27.
Investors filed the suit based on the firm changing the composition of WTI futures on April 22 without first notifying investors. The ETF formerly held 73 percent in WTI futures for June, but the investment firm changed this to 34 percent, by dispersing the holding to July (19 percent), August (19 percent) and September (9 percent). Samsung explained it took the measure in response to a drop in prices for WTI futures for June.
The investment firm reported the change the following day, before markets opened. However, futures of the month of June spiked by 41.4 percent the day after the changes were made. The ETF's yield, however, rose only by 4.3 percent, based on the changes.
Investors state they have lost out on their investments due to the asset managing firm's unilateral changes made to the composition of the fund.
Investors took issue with the changes made without prior notification, claiming they would have pulled out their money to invest in other options had they known about the changes that were to take place.
"The fact that a prior notification was not made goes against the manual for investors," said Yoo Woong-hyun of the law firm Ohyun representing the group of investors.
"The investment firm has been managing this fund for four years and not once have changes without prior notifications been made up until last month. This is a universal principle that players in the industry adhere to."
Regarding the issue, Samsung Asset Management said if the notification was made in advance, this would have led to greater losses for investors, based on market volatilities triggered by the announcement.
"The measures taken were to protect investors, and we will justify the taken measures," a Samsung Asset Management official said. "We will appoint a law firm to take action accordingly."
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| gettyimagesbank |
A group of 220 investors of Samsung's KODEX WTI ETF filed a compensation suit against the asset managing firm, Thursday. This comes after two investors filed a suit with the Seoul Central Court on the same grounds on April 27.
Investors filed the suit based on the firm changing the composition of WTI futures on April 22 without first notifying investors. The ETF formerly held 73 percent in WTI futures for June, but the investment firm changed this to 34 percent, by dispersing the holding to July (19 percent), August (19 percent) and September (9 percent). Samsung explained it took the measure in response to a drop in prices for WTI futures for June.
The investment firm reported the change the following day, before markets opened. However, futures of the month of June spiked by 41.4 percent the day after the changes were made. The ETF's yield, however, rose only by 4.3 percent, based on the changes.
Investors state they have lost out on their investments due to the asset managing firm's unilateral changes made to the composition of the fund.
Investors took issue with the changes made without prior notification, claiming they would have pulled out their money to invest in other options had they known about the changes that were to take place.
"The fact that a prior notification was not made goes against the manual for investors," said Yoo Woong-hyun of the law firm Ohyun representing the group of investors.
"The investment firm has been managing this fund for four years and not once have changes without prior notifications been made up until last month. This is a universal principle that players in the industry adhere to."
Regarding the issue, Samsung Asset Management said if the notification was made in advance, this would have led to greater losses for investors, based on market volatilities triggered by the announcement.
"The measures taken were to protect investors, and we will justify the taken measures," a Samsung Asset Management official said. "We will appoint a law firm to take action accordingly."
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