[2025 ETF Outlook] "Expect Explosive AI Growth This Year... ETFs Related to AI Should Be Watched"

Last Year's Top-Performing US and AI-Related ETFs Swept Gains... Promising Again This Year
Global Volatility Expected to Increase... Demand for Safe Assets Also Rises 'Dividend ETFs Promising'

Major domestic asset management companies also forecast that artificial intelligence (AI) exchange-traded funds (ETFs) will be promising this year. While last year marked the emergence of AI, this year is expected to see explosive growth as AI penetrates existing industries in earnest.

According to the Korea Exchange on the 2nd, last year's top-performing ETFs were dominated by U.S. tech and leveraged products of major U.S. market indices.

The top performer was ACE U.S. Big Tech TOP7 Plus Leverage (synthetic), which recorded a return of 201.6%. Following were PLUS U.S. Tech TOP10 Leverage (180.5%), KODEX U.S. Overseas Korean Investors (103.3%), TIGER U.S. Nasdaq 100 Leverage (99.9%), and TIMEFOLIO Global AI Artificial Intelligence Active (93.8%).

Lee Kyung-jun, Head of Strategic ETF Management at Mirae Asset Global Investments, explained, "The top ranks in ETF market returns were occupied by U.S. big tech (large information technology companies) and U.S. stock ETFs. The future value of big tech companies leading AI technology and U.S. stock companies riding the wave of productivity innovation is increasing, and this future value is reflected in big tech and U.S. stocks."

Asset management firms expect various themes related to AI and innovative technologies to attract attention again this year. In fact, among the 126 newly listed ETFs last year, 66 were thematic ETFs focused on AI, semiconductors, and similar sectors.

Kim Seung-hyun, ETF Consulting Manager at Korea Investment Management, said, "The recent rise of big tech is not due to vague expectations about the AI boom but thanks to companies that have significantly increased profits by utilizing AI. The stock prices of big tech companies have also risen sharply, and this trend is expected to continue."

A representative from Samsung Asset Management also stated, "Investments in AI by U.S. big tech companies will continue," and forecasted, "AI technology innovation led by the U.S. is expected to persist through 2025."

They also anticipated that demand for safe assets would increase due to geopolitical uncertainties and political instability. In this regard, covered call ETFs and dividend-type ETFs were also analyzed as promising.

Head Lee Kyung-jun said, "The popularity of covered calls is expected to continue," adding, "Uncertainty about market outlook may increase interest in bond-mixed types, and the investment trend toward representative indices suitable for long-term investment will be further strengthened." He continued, "Due to ongoing bull markets, investors' hedging demand is expected to lead to the emergence of products like buffer ETFs that manage downside risks."

In particular, U.S.-related ETFs are still expected to be favored by the market. Last year, the S&P 500 and Nasdaq rose more than 20%, and the Dow Jones Industrial Average also increased by more than 10%, showing strength in the U.S. stock market. In line with this trend, last year, TIGER U.S. S&P 500 and KODEX U.S. S&P 500 TR, which are based on the S&P 500 and S&P 500 TR Index, respectively, attracted funds of 3.6 trillion won and 2.3 trillion won.

A Samsung Asset Management official explained, "There is uncertainty regarding the implementation and speed of policies with the inauguration of the second Trump administration," but added, "The benefits of Trump's policies, such as corporate tax cuts and deregulation, are also expected to positively impact big tech and growth sectors driving the U.S. economy." The official emphasized, "Investment in U.S. representative indices and high-quality dividend growth stocks is still expected to be valid. The strategy to secure monthly dividends based on U.S. representative indices and high-quality dividend growth stocks will continue to be effective this year."

Kim Seung-hyun also said, "With the start of the Trump 2.0 administration, U.S. exceptionalism (or America First) is expected to be further strengthened," explaining, "While policy trends matter, looking at the market capitalization weights by country or the top 10 global companies by market cap, the proportion of the U.S. and U.S. companies is quite high." He added, "From a fundamental and corporate global competitiveness perspective, it is unlikely that any country or company will catch up with or threaten the U.S. in the short term, so U.S.-centered investment is appropriate to continue."

Meanwhile, last year, the total net assets of domestic ETFs reached 173.2 trillion won, a 43.0% increase compared to 2023. The number of listed items also rose 15.1% from 812 to 935.