Trends in ETF Investment: Emergence of Concentrated and Buffer ETFs
Trends in ETF Investment: Emergence of Concentrated and Buffer ETFs
The ETF market is currently experiencing a trend towards concentrated investment in a limited number of stocks. Kiwoom Asset Management is planning a new ETF focusing on Nvidia and Palantir, complemented by U.S. 30-year treasury bonds. Such concentrated ETFs involve higher risks but promise substantial returns, thereby attracting considerable investor interest. Shinhan SOL's Cosmetics TOP3 Plus ETF invests over 60% in Amorepacific, Cosmax, and Cilicon Two, making it easier for investors to follow the market trends of specific industries. To aid investors in risk management, there is increasing attention on the introduction of 'buffer ETFs' in South Korea, which have gained popularity in the U.S. These products offer partial protection against investment losses while setting a cap on returns. A notable example is a buffer ETF tracking the S&P500 index, which provides up to 15% loss protection with a cap on annual returns at 14.24%. Tailored to risk-averse investors, the potential market entry of such ETFs in South Korea will depend on financial regulatory frameworks and investor demand.
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