IKO, the South Korea ETF, returned 125% in the year to 30 September 2026, and ASIA and IAA returned about 50 to 55%. Almost half of IKO is just two companies, SK hynix and Samsung, both riding the memory-chip boom. These funds fell about 18 to 24% in the two years to September 2023. They can suit a small satellite position, but chasing them after a run like this is a bet on the chip cycle continuing.
What has happened
Asia has been the stand-out region on the ASX over the past year. While a global fund like VGS returned a respectable 10.1%, the Asian technology funds have left it far behind. The gains were still running in September: IKO rose 5.2% that month, ASIA 6.6% and IAA 7.5%.
But "Asia" is not one trade. Over the same year the China and India funds went backwards. IZZ, which holds large Chinese companies, fell 19.5%, and NDIA, the India Nifty 50 fund, fell 17.2%. The winners were almost entirely the markets where computer chips dominate: South Korea and Taiwan.
Asian ETFs: 1-year and 5-year returns
The funds, side by side
| ETF | What it holds | Fee | Size | 1 year | 3 years (a year) | 5 years (a year) |
|---|---|---|---|---|---|---|
| IKO | South Korea | 0.45% | $198m | +125.3% | +44.7% | +20.1% |
| ASIA | Asian tech giants | 0.67% | $1,468m | +55.4% | +43.5% | +17.6% |
| IAA | 50 largest Asian companies | 0.29% | $1,831m | +50.1% | +35.9% | +15.1% |
| EMXC | Emerging markets ex China | 0.25% | $395m | +42.4% | n/a | n/a |
| VAE | Asia ex Japan, broad | 0.40% | $815m | +22.7% | +20.5% | +9.1% |
| IEM | Emerging markets | 0.69% | $1,830m | +21.2% | +19.7% | +8.2% |
| VGE | Emerging markets (no Korea) | 0.48% | $2,159m | +6.0% | +13.6% | +5.8% |
| IZZ | China large caps | 0.60% | $452m | −19.5% | +8.2% | +0.1% |
| NDIA | India Nifty 50 | 0.69% | $166m | −17.2% | −2.6% | +0.3% |
Total returns including distributions to 30 September 2026. Source: TMX Australia monthly funds report.
Notice VGE. It returned only 6.0% over the year because its index provider, FTSE, classes South Korea as a developed market, so VGE holds no Korean companies at all. Two "emerging markets" ETFs, very different results.
Three companies are doing most of the work
The main driver is memory chips. Artificial intelligence data centres need huge amounts of high-speed memory, and two Korean companies, SK hynix and Samsung Electronics, make most of it. Taiwan Semiconductor (TSMC) manufactures most of the world's advanced chips. When those three rise, Asian ETFs rise with them.
How much of each fund is TSMC, Samsung and SK hynix
- IAA is 54% in those three companies, with TSMC alone at 29%.
- IKO is 47% in SK hynix and Samsung. Add other Samsung group companies and the share is higher still.
- ASIA spreads it a little more, but 85% of the fund is technology.
- VAE and IEM are broader, with the three chip makers at about 29 to 30%.
How much of each fund is technology
That makes these funds less of a bet on "Asia" and more of a bet on one industry. Overlap shows it too: IAA and VAE are about 50% the same, while VGS and IAA share almost nothing (0.2%), because VGS holds no Korean or Taiwanese companies. See how much IAA, ASIA and IKO overlap →
The chip cycle cuts both ways
Memory chips are one of the most cyclical businesses in the world. When demand is strong, prices and profits soar. When factories catch up and supply overshoots, prices fall and profits can collapse. Samsung and SK hynix have been through this many times.
The ASX data shows it. Picture someone who put $10,000 into each fund five years ago, on 30 September 2021.
Two years of losses, then a surge
- After two years, the IKO investor was down 17.5%, ASIA 24% and IAA about 20%. VGS was up 6%.
- After four years, IKO was only 11% ahead. VGS was 59% ahead.
- In year five, IKO more than doubled and jumped from last to first.
In other words, most of IKO's five-year gain came in a single year. Anyone who sold during the slump, which many people do, missed it. And anyone buying now is buying after the surge, not before it.
What chasing hot sectors usually looks like
Top performers attract money after the gains, not before. The pattern is common: a sector has a great year, it makes the "best ETF" lists, and new money arrives just as the easy gains are behind it. Then a normal pullback feels like a disaster, and investors sell near the bottom.
The rest of Asia shows how quickly a story can turn. India was one of the most talked-about markets a few years ago, yet NDIA has returned −7.5% over three years. China large caps (IZZ) are roughly where they were five years ago. Chinese technology fund CNEW is slightly behind over five years.
None of this tells you what Korean or Taiwanese chip stocks will do next. It tells you that a 125% year says nothing about the next 12 months, in either direction.
Sizing it as a satellite
For most investors, especially those approaching or in retirement, a sector bet like this sits on top of a diversified core, not instead of it. Here is what a severe fall in an Asian tech fund would do to a whole portfolio, depending on the size of the holding.
If an Asian tech ETF fell 50%, your whole portfolio would fall…
- Broad and cheaper: VAE (0.40%) and IEM give you the Asian chip makers alongside banks, India and other markets, so the concentration is lower.
- Focused large caps: IAA is the cheapest of the focused funds at 0.29%, but more than half is three companies.
- Single country: IKO is the most concentrated of all. It suits investors who specifically want Korea and accept that two companies drive it.
- Rebalance. If a satellite has doubled, it may now be twice the size you planned. Trimming back to your target is one way to lock in some gains without abandoning the idea, though selling can trigger capital gains tax.
Compare the options: IAA vs ASIA, IAA vs VAE, VGE vs IEM and IEM vs EMXC. For the full line-up, see our complete guide to Asia, China and emerging markets ETFs, every Asia ETF, and how to build a satellite portfolio.
Common questions
Why is the South Korea ETF up so much?
Mostly because of SK hynix and Samsung Electronics, which make up about 47% of IKO. Demand for memory chips used in AI data centres pushed both sharply higher. IKO returned 125.3% in the year to 30 September 2026.
Is it too late to buy Asian tech ETFs?
Nobody can know. What the data shows is that these funds are concentrated in a cyclical industry and fell about 18 to 24% in the two years to September 2023 before surging. Anyone buying now should be comfortable with large swings and keep the position small.
What is the difference between IAA and VAE?
IAA holds the 50 largest Asian companies for 0.29% a year, and 54% of it is TSMC, Samsung and SK hynix. VAE holds hundreds of companies across Asia excluding Japan for 0.40%, including India, with the three chip makers at about 30%. They are about 50% the same.
Does VGS include Korea and Taiwan?
No. VGS tracks developed markets under MSCI's classification, which treats South Korea and Taiwan as emerging markets. To own them you need a separate Asia or emerging markets ETF.
Joshua Stega is a financial adviser with 20 years' experience and the founder of ETF Adviser. He built ReviewETF to make every Australian ETF easy to find and compare.
General information only. It does not take into account your objectives, financial situation or needs. Consider the PDS and TMD before investing. Past performance is not a reliable indicator of future performance. Data as at 30 September 2026.