Single-stock leveraged exchange-traded funds (ETFs) tracking Samsung Electronics (005930.KS) and SK hynix (000660.KS), which marked their first week since launch, have absorbed more than 10 trillion won in daily trading volume, emerging as a "black hole" for stock market capital. Behind the explosive popularity, however, side effects such as extreme concentration of funds among major asset managers and widening price disparities are emerging, prompting calls for investor caution.
According to Koscom's ETF Check on Wednesday, the 14 single-stock leveraged products recorded a combined trading value of 10.97 trillion won on Tuesday. The figure is roughly 1.7 times the 6.23 trillion won total trading value of all 48 existing domestic leveraged ETFs combined.
Amid the explosive trading volumes, the concentration of funds in the two largest players — Samsung Asset Management (KODEX) and Mirae Asset Global Investments (TIGER) — was also extreme. Most single-stock leveraged products from the two firms surpassed 1 trillion won in market capitalization shortly after launch, dominating the market. KODEX SK hynix Single Stock Leverage had the largest market cap at 2.22 trillion won, followed by KODEX Samsung Electronics Single Stock Leverage (1.77 trillion won), TIGER SK hynix Single Stock Leverage (1.37 trillion won), and TIGER Samsung Electronics Single Stock Leverage (892.4 billion won).
Among products from other asset managers, only Korea Investment Management's ACE Samsung Electronics Single Stock Leverage (112.4 billion won) crossed the 100 billion won market-cap threshold. The remaining products are struggling to secure initial liquidity, with market caps in the tens of billions of won and daily trading values stuck in the 10 billion to 20 billion won range.
Shinhan Asset Management (SOL) and Hanwha Asset Management (PLUS), which launched 2x inverse products betting on declines, found a niche and reaped solid gains. Although their market caps remain below 100 billion won, SOL SK hynix Futures Single Stock Inverse 2X recorded 433.9 billion won and PLUS Samsung Electronics Futures Single Stock Inverse 2X posted 303.4 billion won in trading value on Tuesday, successfully absorbing demand from inverse investors.
By underlying asset, SK hynix leveraged products proved more popular than Samsung Electronics ones. Based on Tuesday's closing prices, the combined market cap of seven SK hynix leveraged products stood at 3.86 trillion won, exceeding the 2.91 trillion won combined market cap of the seven Samsung Electronics leveraged products.
The concentration in major asset managers has exposed investors in smaller ETFs to low trading volumes, while the "disparity ratio," which is directly tied to investor protection, has also widened. As trading volumes surge, liquidity providers (LPs) have at times failed to match quotes, leading to instances where ETFs trade at prices higher than their actual fund values. As of the previous day's close, the disparity ratios of KB Asset Management's RISE Samsung Electronics Single Stock Leverage and Hanwha Asset Management's PLUS Samsung Electronics Single Stock Leverage soared to 2.36% and 2.15%, respectively. PLUS Samsung Electronics Futures Single Stock Inverse 2X also recorded a disparity ratio of -2.70%.
When the disparity ratio widens, investors end up buying or selling ETFs at prices higher than the actual indicative net asset value (iNAV). A closing disparity ratio exceeding 1% is also subject to mandatory disclosure. "Even if you correctly predict the direction of the underlying asset, you can still suffer losses due to the disparity ratio, and if trading volume is thin, it becomes difficult to sell at the desired price, so investors need to exercise particular caution," an official in the financial investment industry said.
