Individuals Flock to KODEX US Currency Hedge Product

Samsung Asset Management announced on the 9th that following U.S. President Donald Trump's announcement on the 2nd (local time) to impose reciprocal tariffs on 185 countries worldwide, individual cumulative net purchases totaling 19.3 billion KRW flowed into KODEX US Nasdaq 100 Leverage (Synthetic H) over four trading days from the 3rd to the 8th.

During the same period, individual net purchases of approximately 13.4 billion KRW and 11 billion KRW were also recorded for KODEX US Nasdaq 100 (H) and KODEX US S&P 500 (H) products, respectively. On the 7th alone, these products recorded individual net purchases of 20.8 billion KRW, 10.4 billion KRW, and 7.6 billion KRW, respectively, setting the highest daily record since their listing.

As the S&P 500 index plunged 12.1% and the Nasdaq 100 index dropped 13.3% over four days until the 8th, domestic ETF individual investors showed active buying momentum, recording net purchases exceeding 1.3765 trillion KRW during the same period. Among U.S. equity ETFs, based on individual net purchases, KODEX US Nasdaq 100 Leverage (H) ranked 8th, KODEX US Nasdaq 100 (H) 15th, and KODEX US S&P 500 (H) 18th, indicating a noticeable preference for currency-hedged U.S. investment products. Until the end of last month, currency-hedged products were outside the top 30 in individual net purchases.

The strong buying interest from individual investors in currency-hedged U.S. investment products is analyzed to be due to growing expectations that the Trump administration will pursue a weaker dollar to revive manufacturing. Recently, as the KRW/USD exchange rate approached 1,500 KRW, theories about the exchange rate peaking have emerged. President Trump has repeatedly pointed out currency depreciation by trade partners as a non-tariff barrier and emphasized the need to resolve exchange rate issues to address trade imbalances.

For currency-exposed products, even if the value of the investment target rises, if the dollar value relative to the Korean won falls due to exchange rate depreciation, the return inevitably decreases. In contrast, currency-hedged products fix the dollar value relative to the Korean won, allowing investors to realize most of the investment target's returns regardless of exchange rate fluctuations. They are considered desirable investment targets in situations where a weaker dollar is expected.

Oh Seung-hoon, Head of the Research Center at Samsung Asset Management, said, "The current exchange rate is at a high level," adding, "Since the Trump administration is likely to realize a weaker dollar through strong challenges to other countries' exchange rate policies to resolve domestic economic issues, preparations for this are also necessary."

Among approximately 960 products listed domestically, only 95 products (including Synthetic H) are currency-hedged, and among them, there are a total of 29 U.S. equity products (including leverage, inverse, and mixed types). Sector/theme products include only four: KODEX US Big Tech 10 (H), TIGER US Tech TOP100INDXX (H), RISE US Semiconductor NYSE (H), and SOL US Dividend Dow Jones (H).

Kim Do-hyung, Head of ETF Consulting at Samsung Asset Management, explained, "Domestic individual investors have very high trust in the upward trend of the Nasdaq 100 and S&P 500 indices based on their past performance," adding, "Despite recent significant market volatility, steady net buying has been observed." He continued, "Considering the possibility of future exchange rate offensives by the U.S. government, the current exchange rate nearing 1,500 KRW may undergo a downward adjustment," and added, "There is a noticeable trend of switching investments to KODEX US Nasdaq 100 (H) and KODEX US S&P 500 (H), which have secured trading liquidity."