Changes in the ETF Market and Investor Movements
As the aging population increases, the retirement pension market is expanding, but the popularity of domestic index-tracking ETFs is waning. This decrease is attributed to the long-term underperformance of ETFs tracking domestic indices like KOSPI relative to major international indices. In the first quarter, domestic index ETFs accounted for only 1.71% of the retirement pension account ETF balance. Meanwhile, individual investors are showing strong enthusiasm for American index-tracking ETFs. There are concerns that this investment enthusiasm in foreign ETFs may contribute to the weakening of the Korean won. Consequently, the government is adjusting its policy to increase the proportion of domestic stock investments.
The global stock market has become uncertain due to U.S.-imposed tariffs, leading individual investors to focus heavily on leveraged ETFs. According to the Korea Exchange, individual investors are massively purchasing leveraged ETFs imitating KOSPI200 and KOSDAQ150, with significant interest in ETFs tracking tripled U.S. semiconductors and the Nasdaq 100 Index. However, securities firms are not ruling out further index declines, and they find it difficult to assess the impact of these tariffs given the prevailing uncertainties.
Due to the uncertainty surrounding President Trump's tariff policies, investors are shifting their funds to more stable short-term investment products. A substantial influx of funds into ultra-short-term bond funds and money market funds (MMFs) has been observed in just one day. As market volatility expands due to these policies, investors favor short-term products that are traditionally seen as more stable than standard equity markets, driving significant capital into major ETFs.
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