[Asia Economy Reporter Myunghwan Lee] A fresh breeze is blowing through the domestic and international exchange-traded fund (ETF) markets. ETF products that diversify investments across various thematic companies are making their mark on the domestic stock market. In the U.S. stock market, a new type of leverage and inverse ETF products that track single stocks have emerged. The securities industry views the attempt to increase the diversity of ETF products positively, as it provides new investment opportunities.
According to the financial investment industry on the 28th, four out of five ETF products listed on the Korea Exchange this month were confirmed to be thematic products. The 'KBSTAR Global Agriculture Economy MV' and 'Heroes Global REITs Aegis Active,' scheduled to be listed on the 29th, are new thematic products investing in global agricultural companies and global REITs, respectively. ETFs that diversify investments in companies with high research and development (R&D) investment ratios and unicorn companies were also listed earlier this month.
In the U.S. stock market, a new type of ETF tracking only a single stock made its debut this month. On the 14th (local time), AXS Invest launched eight leverage and inverse ETF products tracking single stocks such as Tesla and Nvidia. Then, on the 26th, an options ETF providing risk hedging for the single stock Tesla also debuted. Unlike existing ETFs, which typically have a risk-hedging nature through diversified investments, these products tracking only one stock enable new investment strategies. Jin-young Kim, a researcher at Kiwoom Securities, said, "Short-selling strategies, which were previously accessible only to professional investors, can now be utilized by individual investors through ETFs," adding, "Despite the high risk, these strategies attracted market attention due to their diversity."
The securities industry pointed out that the release of various products offers investors broader investment opportunities. Researcher Kim said, "It is impressive that individual investors now have expanded choices for strategies previously available only to professionals, and that various investment strategies suited to market conditions can be implemented," adding, "While innovation and technology-themed ETFs surged in the liquidity era after COVID-19, various derivative strategy ETFs are welcomed in the tightening era with increased volatility."
Meanwhile, there were also remarks that domestic market conditions need to be established to allow the development of diverse ETF products. Insik Kim, a researcher at IBK Investment & Securities, emphasized, "The U.S. continues an open trend with the launch of single-stock linked derivative ETFs and the conversion of mutual funds to ETFs, but it still seems difficult to apply these in Korea," adding, "Although Korea’s ETF market follows the U.S., the global leader, there are differences in market environment and regulatory requirements."
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