(Nov 14): Korean beauty products have long filled American medicine cabinets. Now, a new exchange-traded fund is set to test whether there’s room for them in US investors’ portfolios as well.
This week, Guinness Atkinson Asset Management launched the Guinness Atkinson K-Beauty ETF (ticker KBTY), aimed at capitalising on the rapid growth and popularity of South Korea’s US$15 billion (RM61 billion) “K-beauty” industry.
The fund holds shares of companies that might be unfamiliar to Wall Street investors but are fixtures on social media and behind the beauty counter. Amorepacific Corp, PharmaResearch Co and Kolmar Korea Co — some of its top holdings — own or manufacture products for widely recognised brands including Laneige, COSRX and Summer Fridays.
“The products tend to be very effective and good, and they tend to be cheaper,” allowing them to “fill a sweet spot” with consumers, Jim Atkinson, chief executive officer of Guinness Atkinson, said in an interview. K-beauty is “going global very rapidly”.
The bet is that K-beauty’s popularity will translate into an investment theme that will catch fire with investors, even as other consumer-themed ETFs have stumbled. Working in its favour, the K-beauty trend does have considerable momentum.
South Korea exported US$11.4 billion in cosmetics in 2025, a 12% jump from a year prior, according to the South Korean Ministry of Food and Drug Safety. The country also overtook the US as the world’s second-largest cosmetics exporter in 2025, trailing only France, with the US becoming its largest cosmetics export market.
Still, in the world of ETFs, a popular consumer trend doesn’t necessarily translate into a sticky investment. Issuers behind many such thematic ETFs have had a spotty record of trying to turn cultural niches and fads into long-term wins, as they often struggle to attract enough cash to survive.
“Investors have been really interested in tech, AI, and disruptive technology themes,” said Roxanna Islam, head of sector and industry research at VettaFi, an index provider and financial-services firm. “It’s a difficult environment for thematic ETFs outside of that range.”
The graveyard of thematic ETFs is littered with funds that tried to draw on a popular fad but failed to gain enough investor attention to survive. So far, more than 320 ETFs have closed this year, with around two dozen of them being thematic ETFs.
One Korean-theme casualty is the US-listed Jakota KPOP & Korean Entertainment ETF (KPOP), which, prior to its liquidation last year, had been designed to capitalise on the global K-pop music phenomenon made popular by groups such as BTS and BLACKPINK. That fund only had US$1.4 million in assets when it closed.
Similarly, the MUSQ Global Music Industry Index ETF (MUSQ) was meant to serve as a way for investors to tap into the global music industry, but it liquidated in October after just three years.
The more specific the theme, the harder it can be to attract enough assets to offset a fund’s operating costs, creating a “shrinking floor working against you”, said Bloomberg Intelligence analyst Athanasios Psarofagis. In the case of niche ideas like K-beauty and K-pop, being a fan doesn’t necessarily mean wanting to invest in the companies behind them.
“I like certain musicians. Would I invest in their label? Those usually don’t make good investments, so that’s where the gap lies,” Psarofagis said.
When it comes to the KBTY fund, Atkinson at Guinness Atkinson says the investment case is built on much more than the industry’s social-media buzz. The ETF is also reaching beyond traditional cosmetics, including Korean medical-aesthetics companies such as PharmaResearch, Classys, and Hugel whose skin fillers and aesthetic treatments could benefit from the explosive popularity of health treatments like GLP-1 weight-loss drugs.
Atkinson said he expects the fund to appeal first to retail investors, but believes its growth potential could eventually draw institutional interest as well.
“I do believe that excitement, knowledge, and interest is going to grow,” he said.
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