Korean ETF Market Surpasses KRW 500 Trillion; Retirement Pensions and Leveraged Products Fuel Growth
The Korean ETF (Exchange Traded Fund) market has reached an all-time high, surpassing KRW 500 trillion in net assets for the first time. This achievement marks a doubling of market size in just one and a half years, mainly driven by inflows from individual investors and retirement pension funds. As of September 2023, ETF investments within retirement pension accounts stood at KRW 48.7 trillion, nearly doubling each year and signaling strong long-term growth potential.
A surge in KOSPI and the popularity of leveraged ETFs linked to major semiconductor companies such as Samsung Electronics and SK hynix were key factors behind this expansion. Leveraged ETFs related to these companies have become particularly popular among retail investors, injecting new energy into the market. Product diversification, including hybrid bond ETFs, is also broadening, which is expected to further support medium- to long-term market growth.
Experts like Professor Seo Ji-yong emphasize the necessity of shifting from a real estate-centric asset structure to one focused on financial investment, as financial instruments are becoming central to retirement planning. The importance of long-term portfolios that include dividend-focused ETFs and REITs, a clear capital market roadmap, and stronger infrastructure for pensions and capital markets are also highlighted.
ETFs are favored in retirement accounts due to their potential for risk diversification through index rebalancing, and their tailored features such as monthly dividend types meet investors' varied needs. During the accumulation phase, ETFs enable pursuit of market returns, while in the drawdown phase, they offer consistent cash flows, further enhancing their appeal.
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