Hana Asset Management Lists Two New Single-Stock Leveraged ETFs

Hana Asset Management announced that it will list two single-stock leveraged products, introduced following the revision of the Capital Markets Act, on the Korea Exchange on May 27. The listed products are the "1Q Samsung Electronics Futures Single-Stock Leveraged ETF" and the "1Q SK hynix Futures Single-Stock Leveraged ETF."

While single-stock leveraged and inverse investment products have been available in overseas markets such as the United States and Hong Kong, their launch was not possible in Korea due to regulations requiring portfolio diversification. However, the Financial Services Commission revised the relevant enforcement decree last April to enhance incentives for capital market investment and improve investor convenience, paving the way for full-scale domestic launches.

Compared to index-based leveraged ETFs such as those tracking the KOSPI200, single-stock leveraged ETFs are characterized by a much higher concentration of investment in a specific company. Since these products do not diversify across different stocks and accurately track double the daily price movement of individual stocks, any issues or growth momentum of the underlying company are directly reflected in the share price.

Hana Asset Management's single-stock leveraged products are designed to achieve positive double the daily return of the underlying index by purchasing futures contracts of Samsung Electronics and SK hynix with approximately 170% exposure, while conducting precise daily rebalancing. To reduce investment costs, the annual total expense ratio for both products has been set at 0.0901%.

However, single-stock leveraged products carry significant investment risks along with the potential for higher returns. Notably, in sideways markets with fluctuating share prices, the so-called "volatility decay" can result in principal losses even if the underlying index recovers to its previous level after a decline. For example, if the underlying index falls by 10% and then rebounds by 11.11% to return to its original level, a regular ETF investor would recover their principal investment, but a single-stock leveraged ETF investor would still remain in a loss position. Therefore, these products are unsuitable for long-term holding and are more appropriate for short-term investments in specific stocks.

To invest in the newly introduced single-stock leveraged products, investors must complete a total of two hours (one hour of basic and one hour of advanced) of pre-investment education through the Korea Financial Investment Association’s learning system, and deposit a minimum basic margin of 10 million won.

Kim Taewoo, CEO of Hana Asset Management, stated, "We are pleased to participate in the government's efforts to resolve regulatory asymmetries between domestic and overseas-listed ETFs by launching single-stock leveraged products," and added, "We will continue to introduce innovative products in the future."

This content was produced with the assistance of AI translation services.