Despite Stock Market Slump, More Money Poured into ETFs

Growing Volatility Highlights Appeal of ETFs Diversified Across Various Stocks
Inverse ETFs Profitable During Index Declines, Safe Bond-Type Products Gain Popularity

[Asia Economy Reporter Kwon Jaehee] Despite the ongoing stock market downturn this year, more funds have flowed into the Exchange-Traded Fund (ETF) market. This is interpreted as reflecting expectations that ETFs, which diversify investments across various stocks amid increased market volatility, can continue to offer safety and steady growth.

According to the Korea Financial Investment Association on the 15th, as of December 13, the size of investor deposits stood at 45.9637 trillion won. This is because investors have been withdrawing from the stock market as the KOSPI has dropped about 20% this year. Investor deposits exceeded 70 trillion won in January but have since sharply declined to below the 50 trillion won level.

In contrast, more funds are flowing into ETFs. According to the Korea Securities Depository's SEIBRO, from January 3 to December 14 this year, the total net assets of ETFs reached 80.8308 trillion won. It is unusual for ETF net assets to surpass the 80 trillion won mark. This represents an increase of over 7 trillion won just this year. The total net assets of ETFs exceeded 80 trillion won for the first time last month, then slightly decreased before recovering to the 80 trillion won level again.

In particular, bond-type ETFs have attracted significant inflows this year. They have drawn 9.4929 trillion won in funds, bringing total assets to 18.8864 trillion won, ranking third behind overseas index ETFs (19.8297 trillion won) and market index ETFs (19.2966 trillion won). This is likely due to the activation of bond investments amid rising interest rates and the appeal to investors that, like regular bonds, they can be redeemed at maturity based on yield.

Among the top 10 ETFs by returns, six tracked market indices. All six were identified as "inverse" products designed to generate profits when the stock market declines. From January 3 to December 14 this year, the highest-performing ETF was "KODEX US S&P Energy (Synthetic)" with a return of 65.30%. This product consists of companies in the energy sector of the S&P 500. Additionally, two U.S. Treasury bond ETF products were also ranked within the top 10.

Park Seungjin, a researcher at Hana Securities, said, "Although the inflow of funds into the ETF market has somewhat weakened amid ongoing recession forecasts, bond-type ETFs continue to see steady inflows. It is still judged that portfolio construction strategies prioritizing stability remain valid."