Despite KOSDAQ's lower returns compared to KOSPI this year, exchange-traded funds tracking the secondary index have attracted faster capital inflows, signaling a shift in investment flows.
According to the Korea Securities Depository, as of February 20, total net assets of KODEX KOSDAQ150 and KODEX KOSDAQ150 Leverage stood at 7.18 trillion won and 4.91 trillion won, respectively. From year-end 2024 levels of 1.60 trillion won and 1.85 trillion won, the two products expanded 349% and 166% in roughly two months.
Net asset increases for the two products reached 5.54 trillion won and 2.97 trillion won this year. These figures surpass the net asset growth of KODEX 200 (5.31 trillion won) and KODEX Leverage (2.06 trillion won), Korea's largest KOSPI-tracking ETFs, during the same period.
The growth appears even more striking when compared to index performance. KOSDAQ has risen approximately 24% this year, trailing KOSPI's 38% gain by about 14 percentage points. KODEX 200 and KODEX Leverage posted returns of 37.73% and 85.57%, while KODEX KOSDAQ150 and its leveraged counterpart returned 27.84% and 57.42%.
Retail investor demand has been particularly strong. Individual investors net purchased 3.01 trillion won and 1.70 trillion won worth of KODEX KOSDAQ150 and KODEX KOSDAQ150 Leverage, ranking first and second among all ETF net purchases this year. Retail investors also bought TIGER KOSDAQ150 (785.4 billion won), ACE KOSDAQ150 (108.4 billion won), and RISE KOSDAQ150 (34.4 billion won).
Securities analysts attribute the inflows to policy expectations. "The gap with KOSPI is narrowing rapidly due to the government's KOSDAQ market revitalization policies," said Lee Jae-man, researcher at Hana Securities. "The 12-month cumulative return gap between KOSDAQ and KOSPI has narrowed to -42%, the lowest level since 2003."
However, valuation concerns persist. KOSDAQ's price-to-earnings ratio recently exceeded 120 times while corporate earnings improvement remains relatively limited.
"Short-term capital inflows continue, but fundamental improvements will be a key variable for market direction," a financial investment industry official said. "Given the difficulty of distinguishing quality stocks in the KOSDAQ market, responding through KOSDAQ150 index-tracking ETFs may be more effective."