High Dividend ETFs Experience Outflows Following Tax Reform Announcement
High dividend ETFs focused on the financial sector experienced significant outflows following the announcement of the 2025 tax reform. The primary cause is attributed to the increase in the highest separated taxation rate on dividend income. Since the government announced the plan, substantial funds have withdrawn from high dividend ETFs. While the new tax plan saw a positive inflow of $10.6 billion in the U.S. ETF market, emerging market ETFs experienced outflows.
Current tax reforms potentially jeopardize future preparedness as they impose restrictions on dividend income from ETFs. Individual investors have sold a net amount of 7.2 billion KRW worth of 28 domestically listed dividend ETFs between the 1st and 4th. Consequently, ETFs such as ‘PLUS High Dividend,’ ‘TIGER Bank High Dividend Plus TOP10,’ and ‘KODEX High Dividend’ underperformed market expectations, showing a downward trend.
The governing bodies and financial analysts foresee potential challenges as only about 15% of companies meet the dividend orientation criteria eligible for separated taxation. This situation suggests a need for investors, particularly those preparing for retirement, to reassess their strategic positions.
Related ETF
Related News
Diminished Dividend Expansion Expectations Lead to Outflow in High Dividend ETFs - Seoul Economic DailySecurities > Domestic Stock Market News: After the government announced a plan for separate taxation on dividend income that fell short of market expectations, money is flowing out rapidly from high dividend ETFs...
High-Dividend ETFs That Once Benefited Now Considered 'Cold Rice'High-dividend ETFs that were once in favor are now considered 'cold rice,' with a wave of disappointment following tax revisions after the presidential election; retail investors have switched to net selling this month.
Related ETF
Impact of Tax Reform Proposal Leads to Fund Outflow from High Dividend and Financial ETFs…Deterioration of Investor Sentiment - E-TodayIt was found that there was a significant outflow of funds from financial ETFs, which had shown a steady inflow of funds during the first half of the year, after the announcement of the 2025 tax reform proposal.