Impact of Rising USD-KRW Exchange Rate on ETF Performance
Due to the recent surge in USD-KRW exchange rates, exchange-traded funds (ETFs) with currency exposure are outperforming their currency-hedged counterparts. Samsung Asset Management's 'KODEX US S&P500' currency-exposed ETF achieved a 24.22% return over the past six months, outpacing its currency-hedged counterpart by 6.38%. Similarly, the TIGER US Nasdaq100 ETF also showcased superior performance over its currency-hedged version. However, experts emphasize that in times of a declining exchange rate, a currency-hedging strategy may effectively mitigate risk.
Korean retail investors are heavily investing in the 'iShares 0-3 Month Treasury' (SGOV) ETF, which invests in U.S. Treasury securities with maturities of less than three months, making it a sought-after safe cash management tool. Contrarily, the TPLX ETF, tracking a 3x leveraged version of the Philadelphia Semiconductor Index, experienced a downturn, whereas quantum computing firm IONQ showed a positive trend. This reflects the diverse strategies used by investors navigating a volatile market.
The strong dollar phenomenon continues, leading currency-exposed S&P500 tracking ETFs to deliver higher returns than their currency-hedged counterparts. The KODEX US S&P500 ETF rose 19.38% over six months, outperforming currency-hedged ETFs by 6.5%, primarily driven by ongoing exchange rate increases. Meanwhile, operating costs for currency-hedged ETFs have escalated, necessitating careful attention to associated performance metrics.
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