More than one-third of the increase in net assets in Korea's exchange-traded fund (ETF) market this year, amid rapid growth, was concentrated in semiconductor products. The result stems from asset managers competitively launching related products and drawing in investor funds, as the artificial intelligence (AI) investment boom and expectations for an industry recovery grew from last year. Concerns are emerging, however, that as products' concentration in semiconductors has deepened, the "headwind" the market faces has grown fiercer than before.
According to financial information provider FnGuide on the 4th, there were a total of 1,155 ETFs listed in Korea as of the 31st of last month, an increase of 116 from the end of last year. Over the same period, total net assets surged by 138.013 trillion won (about 47%), from 296.4744 trillion won to 434.4874 trillion won. As ETFs reshaped the landscape of Korea's fund market, they served as a key driver in pushing the scale of public funds beyond that of private funds.
At the center of the market's expansion are semiconductors. ETFs with "semiconductor," "Samsung Electronics," or "SK hynix" in their names (including leveraged and inverse products) rose by 33, from 45 at the end of last year to 78 at the end of last month. Over the same period, net assets of these products surged by 48.9916 trillion won, from 15.7342 trillion won to 64.7258 trillion won. That means 35.5% of the total increase in ETF net assets came from semiconductor-related products. The share of semiconductor products, which had been just 5.3%, also rose nearly threefold to 14.9%.
In particular, newly launched "concentrated" semiconductor products enjoyed greater-than-expected popularity, adding to the fervor. Three of the top five semiconductor-related ETFs by net asset growth were products listed this year. TIGER Semiconductor TOP10 ranked first, with net assets rising 6.1154 trillion won from the end of last year, followed by SOL AI Semiconductor TOP2 Plus (5.2456 trillion won), listed in March this year, and RISE Samsung Electronics SK hynix Bond Mixed 50 (4.1476 trillion won), launched in February. KODEX SK hynix Leverage, listed at the end of May, also grew 3.6163 trillion won, entering fourth place in net increase within a short period.
However, while Korea's semiconductor ETF market expanded rapidly in just seven months, cases in which investment targets and management strategies overlapped around a handful of large-cap stocks were commonplace. The assessment is that while competition to develop products in response to investor demand drove the outward expansion of the ETF market, it also increased duplicate exposure to specific sectors and stocks. There is criticism that, with emphasis placed on following a proven formula for success, there was no progress in terms of actual portfolio differentiation, even as investment options increased.
Indeed, as the KOSPI rally early in the year absorbed funds, inflows into domestic equity ETFs in the first half exceeded twice those into overseas equity ETFs, but the warmth reached only some themes. In its "Second Half 2026 Fund Market and Product Strategy" report, NH-Amundi Asset Management analyzed that "38 trillion won flowed into newly listed ETFs in the first half alone, about 47% of total inflows," adding that "the concentration in semiconductors, including single-stock leverage and Samsung Electronics·SK hynix bond mixed products, has deepened further."
Asset managers focused on quickly adopting product structures with a proven "success equation," rolling out follow-up products. After KB Asset Management first introduced in February an ETF holding Samsung Electronics and SK hynix at 25% each and filling the rest with bonds, other asset managers successively listed products with similar asset allocation structures. After SOL AI Semiconductor TOP2 Plus caused a stir, product overhauls reflecting the concept of popular products continued, with Samsung Asset Management changing the name of its existing AI semiconductor ETF into the same form.
The problem is that when expectations for the semiconductor industry falter, products holding similar portfolios could all take a hit at once. When the share prices of large-cap semiconductor stocks fell sharply last month, the returns of related ETFs were all lined up in the bottom tier. In a rising market, a structure with high semiconductor concentration boosted returns, but in a falling market, the same structure acted as a factor amplifying the decline. Since net assets are affected not only by fund inflows but also by rises in the prices of underlying assets, if semiconductor stocks undergo a broad, sharp correction all at once, the overall size of the ETF market could also shrink rapidly.
In addition, even if investment is spread across multiple products, the diversification effect that is the essence of ETFs is inevitably limited if the constituent stocks are similar. In effect, it produces the result of investing in the same sector redundantly. An asset management industry official said, "Competition to launch products around popular themes is itself a natural phenomenon aimed at quickly reflecting market needs," but added, "We need to examine whether the ETF market's quantitative growth has translated directly into qualitative growth, including greater diversity."
