'Express Train to Hell' Average -61.42%... Penny Stocks Multiply as Prices Plummet [Weekend Money]

KOSPI’s Surge Sends Prices Tumbling
Gopverse ETFs Become Penny Stocks
Average Returns Down -61.42% This Year
"Should Be Used Only for Short-Term Purposes"

As the KOSPI index surpasses 6,300 and continues its upward trajectory, "Gopverse" (2x inverse) ETFs-designed to bet twice as much on a market decline-have plummeted into the 200-won penny stock range. Their returns have also dropped significantly.

According to the Korea Exchange on February 27, four out of five KOSPI futures 2x inverse stocks listed domestically are being traded in the 200-won range simultaneously. As of the 26th, even "PLUS 200 Futures Inverse 2X," which had the highest market price among them, fell into the 500-won range, making all of them penny stocks. Currently, only the KOSPI futures 2x inverse ETFs are trading at prices below 1,000 won.

According to the Korea Exchange on the 27th, four out of five KOSPI futures double inverse stocks listed domestically are trading uniformly in the 200-won range. Getty Images

The situation has changed dramatically over the past year. On February 27 last year, the market price of "KODEX 200 Futures Inverse 2X" stood at 2,170 won. It dropped below 1,000 won for the first time on October 2 last year. By the 26th of this year, the market price had plunged to 255 won, which is just one-eighth of what it was a year ago.

Returns have also been poor. According to Koscom ETF Check, all of the top five ETFs with the largest one-week decline in returns were KOSPI futures 2x inverse ETFs. "RISE 200 Futures Inverse 2X" ranked first with a return of -18.56% over the period, while "KIWOOM 200 Futures Inverse 2X" was fifth with a return of -16.38%.

The steep decline in both the price and returns of "Gopverse" ETFs is due to the sharp rise in the KOSPI. The 2x inverse ETFs are structured to deliver twice the inverse of the KOSPI index's daily movement. If the KOSPI 200 index falls by 1%, the 2x inverse ETF rises by 2%. However, if the index rises by 1%, the ETF loses 2%. The KOSPI has risen about 38% so far this year, yet the average return for domestic KOSPI 2x inverse ETFs is -61.42%. This is why investors should not make hasty investment decisions simply because the current prices appear "cheap."

An official at an asset management firm explained, "Inverse products aim for the inverse of daily returns, so if you hold them for more than a few days, actual performance can differ from expectations. If the index fluctuates within a range, even if you get the general direction right, there can be periods where your returns are eroded. In sections where the index drops sharply and then rebounds, the expected hedging effect may turn out to be smaller than anticipated."

The official added, "It's best to use these products only for short-term hedging against increased volatility or to reduce risk in advance of a specific event."

This content was produced with the assistance of AI translation services.