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Fund in Korea Cuts Its Investment in Tesla, Shifting to Chinese Rivals Instead

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(Bloomberg) -- South Korea’s first mutual fund dedicated to investing in the electric-vehicle industry has cut its exposure to Tesla Inc. to the lowest level ever while shifting money into its Chinese rivals.

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The Korea Investment Management Co. fund, a Tesla holder since inception in 2017, has steadily trimmed its exposure to the US carmaker this year to less than 3% of its net asset value, from as high as 9% in the past.

“We sought to lower volatility in the portfolio by reducing our exposure to stocks and taking profit in our top holdings,” Hwang Woo-taek, who manages the fund’s 1.15 trillion won ($887 million) assets, said in an interview.

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Some of the outflow from Elon Musk’s firm has trickled into China’s EV makers, with the Korean fund adding names including BYD Co. and Xpeng Inc. in March and April after “excessive drops,” Hwang said. It has also increased holdings in EV supply-chain stocks ABB Ltd. in Switzerland and US-based Eaton Corp. and lifted its cash holdings.

The fund has bested 98% of its peers over the past three years, riding the longer term success of Tesla, but has suffered a 20% loss so far in 2022. Hwang said he’s waiting for more innovation from Tesla, such as the launch of Cybertruck, before buying more.

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