Volatility in South Korea's stock market continues to widen as geopolitical risks stemming from the Middle East and interest rate uncertainty persist. As individual investors increasingly turn to exchange-traded funds (ETFs) for diversified exposure beyond single-stock bets, the importance of strategies to navigate volatile conditions has come into sharper focus. Three major asset managers — Mirae Asset Global Investments, Samsung Asset Management, and Korea Investment Management — advised building medium- to long-term portfolios that capture both stability and growth, rather than trying to time short-term swings.
According to the financial investment industry on the 27th, leading asset managers have put forward ETF strategies centered on income-generating assets — those producing regular cash flows through interest and dividends — along with blue-chip stocks including semiconductor names. The rationale is that when markets repeatedly surge and plunge, investors should consider cash flow and earnings fundamentals rather than relying solely on price appreciation. In periods where indices swing sharply on short-term events, even identical products can deliver vastly different returns depending on entry timing, making it critical to first secure a structure that cushions volatility, they explained.
Income strategies to anchor the portfolio
Income-oriented strategies were cited first as a way to build a solid portfolio foundation. Mirae Asset Global Investments recommended "TIGER Dividend Covered Call Active," a domestic equity covered call ETF. The covered call strategy involves selling call options to collect premiums, which limits upside in a rising market but mitigates losses during downturns. This product employs flexible active management to participate actively even in rallies, and it recorded the highest distribution rate among domestic equity monthly dividend ETFs as of last month.
"TIGER US Dividend Dow Jones," which invests in U.S. dividend growth stocks, was also presented as a tool for navigating the seesaw market. The product is managed based on a balanced sector composition featuring defensively oriented consumer staples, healthcare, and industrials. It constructs a portfolio around high-quality U.S. companies with consistent dividend track records, selecting approximately 100 firms through a comprehensive assessment of multiple fundamental indicators.
Such strategies — characterized by low earnings volatility and stable cash flow generation — have demonstrated relatively strong defensive performance in markets where directional forecasting is difficult, the managers explained. Lee Jung-hwan, head of Mirae Asset Global Investments' ETF division, said, "Both products are based on different assets and strategies, yet they share a common structure that pursues income and stability. They can serve as effective diversification alternatives in a turbulent market."
Shareholder return and top-stock strategies
Samsung Asset Management likewise recommended covered call products while placing additional emphasis on shareholder return-focused strategies. "KODEX 200 Target Weekly Covered Call," which partially participates in KOSPI 200 index gains while pursuing steady monthly dividends, and "KODEX Shareholder Return High Dividend," composed of blue-chip high-dividend stocks, were presented as core products. KODEX Shareholder Return High Dividend, in particular, holds companies that meet the requirements for separate taxation of dividend income and have demonstrated shareholder value enhancement through measures such as treasury stock cancellation, in line with the current government policy focus on shareholder returns.
"KODEX Top5 Plus TR" was also mentioned. This product comprises the top five stocks by market capitalization and the top five by dividend yield across the KOSPI and KOSDAQ markets, combining semiconductor and automobile companies that drive the domestic market with high-dividend names in a strategy targeting medium- to long-term investors. Kim Do-hyung, head of Samsung Asset Management's ETF consulting division, said, "If you build an investment strategy around theme-based products exposed to volatility, you may find it difficult to sustain medium-term investment due to anxiety, which can lead to psychologically driven underperformance." He added, "These solid products can also be accessed through 'Return to Korea Accounts (RIA),' which is another strategic advantage."
Semiconductor fundamentals intact despite Middle East risks
Korea Investment Management proposed concentrated semiconductor investment, arguing that the sector's fundamentals remain unimpaired despite Middle East-driven risks. The representative products are "ACE Global Semiconductor TOP4 Plus," a passive ETF investing in global semiconductor companies including Nvidia, TSMC, and ASML, and "ACE AI Semiconductor TOP3+," a passive ETF focused on key domestic semiconductor names such as Samsung Electronics (005930.KS), SK hynix (000660.KS), and Hanmi Semiconductor (042700.KQ). By recommending both products simultaneously, the firm presented a strategy spanning the entire domestic and global semiconductor value chain.
Nam Yong-su, head of Korea Investment Management's ETF management division, said, "Despite external shocks, data center investment plans by global big tech firms such as Microsoft, Google, and Amazon remain unchanged, which means AI infrastructure buildout is not a short-term issue but a structural megatrend." He added, "The more the market shakes, the more important it is to anchor your portfolio in fundamentally sound, proven assets."
Experts warn against frequent trading
Experts unanimously cautioned against frequent trading in highly volatile markets. Repeatedly buying and selling to respond to short-term spikes and drops can significantly erode returns, they warned. Instead, the consensus recommendation is to construct a portfolio by defending the downside through dividends and covered calls, anchoring the core with blue-chip stocks, and then adding growth assets such as semiconductors.
