Bae Jae-kyu, CEO of Korea Investment Management and often called "the father of exchange-traded funds (ETFs)," has once again delivered sharp criticism of single-stock leverage products, saying they "should be allowed to die naturally rather than be delisted." Ten days ago, Bae said of single-stock leverage products, "I hope you stop investing even now," drawing attention because the head of an asset manager offering such products was advising restraint in investing in them.
On the 30th, Bae wrote on his social networking service (SNS) about single-stock leverage products, "This should not be a matter of asking only investors. They should be made to die naturally rather than be delisted," adding, "It is possible with just some help from asset managers, liquidity providers (LPs), and slight institutional support."
Bae stressed that with single-stock leverage and inverse double products, "not doing them is best." He noted, "When volatility increases and prices repeatedly rise and fall, the value of the product is quickly eroded due to daily rebalancing and compounding effects," pointing out, "You may be lucky enough to make a profit once or twice, but it is difficult to become continuously wealthy that way."
He also added his views on investment strategies for the semiconductor sector, which has recently seen extreme volatility. Bae emphasized that while semiconductors are essential in the age of artificial intelligence (AI), memory remains a cyclical industry. His view is that rather than investing in a single company or single sector, one should invest across the entire ecosystem, including design, memory, foundry, and equipment.
To investors shaken amid the recent sharp swings in the domestic stock market, he again advised the principle of long-term investing. His point is that if corporate competitiveness and industry growth potential have not been damaged, one should simply watch and endure the daily price changes. He said, "If the direction of the investment is right and time is on my side, sometimes doing nothing may be the best response," adding, "It is natural to feel anxious, but if the direction is right, you must endure time, and if you have made an investment where time is on your side, you can step away from the market noise for a while."
