Korea’s ETF Market Surpasses 450 Trillion KRW, FNGuide Sees Strong Performance
South Korea's exchange-traded fund (ETF) market has surged past 450 trillion KRW for the first time, solidifying its role as a core investment vehicle in domestic capital markets. Diverse product offerings, including equity, bond, and various derivative ETFs, have fueled this rapid expansion, further reinforced by the KOSPI index reaching record highs and attracting significant capital inflows. The active participation of retail investors has driven ETF trading volumes to account for nearly half of all KOSPI transactions, with equity-type ETFs rapidly replacing traditional mutual funds. Flagship products like KODEX 200 and TIGER Semiconductor TOP10 have notably contributed to the surge in net assets among domestic equity ETFs.
ETF products based on FNGuide indices have also surpassed KRW 70 trillion in net assets, driven by surging semiconductor stocks and strong foreign investor inflows. FNGuide reported marked improvements in its financial performance, with quarterly revenue and operating profit rising by 16.5% and 124% year-on-year, respectively. The company has raised this year’s revenue target by up to 48%, aiming for further growth through new product launches and index business expansion. Eased government regulations, growth of active ETFs, and rising interest in leveraged single-stock ETFs are expected to provide additional impetus and structural shifts in Korea’s ETF landscape.
Semiconductor & AI-Themed ETFs Lead Market Amid Growing Concentration
Over the past three months, semiconductor and AI-themed ETFs have demonstrated outstanding performance in the Korean market. The 'TIGER 200 IT Leverage' ETF led returns with a remarkable 213.98%, and ETFs heavily weighted in SK hynix and Samsung Electronics attracted substantial capital inflows, such as 'TIGER Semiconductor TOP 10' and 'KODEX AI Power Infrastructure'. The recent rise of the KOSPI index is also attributed to these two major chipmakers, reflecting their dominant market influence.
More than half of ETF turnover is now concentrated in products linked to these semiconductor giants, and around 30% of new ETF listings expose investors to Samsung Electronics and SK hynix. This phenomenon is being driven by growing AI investments and expectations for memory market recovery, and could intensify with the launch of single-stock leverage ETFs. Asset management firms are expanding the ETF product lineup—from monthly income and bond-mixed products to leverage types—to meet diverse investor needs.
In contrast, interest in secondary battery-related ETFs has waned, with these products recording weak returns over the same period. Meanwhile, AI and quantum computing ETFs recorded strong gains and attracted significant fund inflows. Investors are advised to closely examine ETF structures and the composition of underlying assets, especially as concentrated exposure and rapid fund shifts can heighten portfolio risks going forward.
Korean ETF Market Embraces Fully Active and Single-Stock Leveraged ETFs
South Korean financial authorities are actively pursuing the introduction of 'fully active' ETFs, which are not bound by existing index requirements. Previously, all active ETFs in Korea were 'partially active', meaning they tracked benchmarks to some extent, but the new framework would enable asset managers to exercise full discretion in stock selection and portfolio allocation. Despite cautious voices from leading asset managers such as Samsung Asset Management, who raise concerns about risk and market impact, the Financial Services Commission is firmly maintaining its policy stance with a goal to propose enabling legislation in the National Assembly by the first half of 2026.
Additionally, the Financial Services Commission’s decision to permit single-stock leveraged ETFs is set to reshape the domestic market. ETFs providing 2x leverage on major stocks such as Samsung Electronics and SK Hynix are expected to be listed soon, which may help draw back investment capital that has been flowing overseas. However, there are concerns that the increasing concentration of assets in semiconductor-related ETFs may intensify industry-specific capital flows and increase volatility in large-cap stocks. Investors are thus advised to weigh risk management considerations alongside opportunities to bolster the competitiveness of Korea’s capital markets.
Shifting Branding and Investment Strategies in South Korea’s ETF Market
Korea Investment Management has introduced five key ETFs for investors using the Returning Investment Account (RIA), a special account allowing tax benefits when reinvesting overseas stock sale proceeds domestically. The selected ETFs include flagship indices such as ACE 200 and ACE KOSDAQ150, as well as thematic options like ACE AI Semiconductor TOP3+, ACE Nuclear Power TOP10, and ACE K-Humanoid Robot Industry TOP2+. These products are designed for low fees and diversified exposure to key growth sectors, providing investors with efficient market access while benefiting from reduced tax liabilities. Additionally, Korea Investment Management published an 'RIA Investment Product Guidebook', offering detailed information about ETFs eligible for capital gains tax reduction, thus improving investor understanding.
Meanwhile, IBK Asset Management has announced a complete rebranding of its ETF lineup from 'ITF' to 'IBK', aligning its offerings more closely with its parent financial group and bolstering brand trust. Existing funds such as the 'ITF K-AI Semiconductor Core-Tech ETF' will be renamed to 'IBK K-AI Semiconductor Core-Tech ETF', with this unified branding intended to increase recognition and accessibility for investors. IBK Asset Management currently manages around KRW 320 billion in ETF assets, having recently launched semiconductor-focused products, and plans to continue introducing new ETFs monthly, including those tailored for occupational pension plan investors. These developments are poised to further intensify competition and innovation within the domestic ETF landscape.
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