Low-volatility exchange-traded funds delivered relatively stable returns as the KOSPI index exhibited dramatic swings of nearly 10% within a single week, demonstrating the effectiveness of defensive strategies during turbulent market conditions.
According to Korea Exchange data released on the 9th, the KOSPI recorded an intraday low of 4,899.30 and a high of 5,376.92 between February 2-6, showing nearly 10% volatility. The VKOSPI, known as the "fear index," averaged 50.38 in February, up 53% from the previous month's average of 32.93.
The market volatility was reflected directly in ETF performance. While most ETFs including leveraged and inverse products tracking domestic indices showed significant weekly fluctuations, low-volatility themed products maintained relatively stable trajectories.
During the same period, HK S&P Korea Low Vol gained 2.37%, while PLUS Mid-Cap Low Volatility 50 rose 1.95%, Power High Dividend Low Volatility added 1.49%, and TIGER Low Vol increased 0.57%.
"Low vol" ETFs—derived from "low volatility"—typically construct portfolios centered on stocks with relatively small price swings, such as telecommunications, REITs, and financials. While returns may be limited during strong rallies, these products serve as loss buffers when volatility management becomes critical amid repeated sharp swings.
In contrast, KODEX Minimum Volatility fell 1.31% during the same period, weighed down by heavy exposure to semiconductor giants Samsung Electronics (10.78%) and SK Hynix (6.85%). The divergence illustrates how identical low-volatility strategies can produce different outcomes depending on constituent holdings and sector exposure.
"The KOSPI triggered sidecar circuit breakers three times last week alone as high volatility persisted," said Lim Jung-eun, researcher at KB Securities. "This week could see continued market instability as major macro events including U.S. employment and inflation data are scheduled for release."