"Leverage ETF Drops 40% as Samsung Electronics Falls 15%: Investment Advisory Content Released"

Hanyang Securities Unveils Financial Education Content on Leveraged ETFs

"While Samsung Electronics shares declined by 15.2%, the average return of Samsung Electronics single-stock leveraged exchange-traded funds (ETFs) stood at -40.2%. Leveraged ETFs are not designed to deliver twice the cumulative return over the entire investment period."

Hanyang Securities has released a financial education content series called 'Leverage Investment Advisory', designed to make it easy to understand both the structure of leveraged ETFs—which have recently been cited as a primary cause of recent market volatility—and important considerations for investors.

According to Hanyang Securities on July 29, this content explains that single-stock, double-leveraged ETFs do not track twice the total period return but instead are structured to track double the daily return of the underlying asset. It is designed to help viewers intuitively understand this point by using data from the listing date on May 27 to July 22.

Hanyang Securities compared and analyzed the closing prices of Samsung Electronics and SK hynix over this period with those of single-stock leveraged ETFs listed in Korea. The results showed that while Samsung Electronics shares fell 15.2%, the average return of the Samsung Electronics single-stock leveraged ETFs was -40.2%. Similarly, SK hynix shares declined by 18.4%, but the average return of the SK hynix single-stock leveraged ETFs was -49.4%. This demonstrates that, due to the compounding of daily returns, the final return of a leveraged ETF may not simply be twice that of the underlying asset’s cumulative return.

Source: Screenshot from Hanyang Securities YouTube

The company also presented a simulation in which the underlying asset’s daily volatility was maintained, but the final cumulative return was set at 0%. In this scenario, the average return of Samsung Electronics single-stock leveraged ETFs was -14.4%, and the SK hynix version was -21.1%.

Furthermore, under the assumption that the same level of volatility persists for six months or one year, even if the underlying asset returns to its original price (0%), the double-leveraged return averages -39.8% (Samsung Electronics) and -50.3% (SK hynix) after six months. After one year, losses expand to -63.4% (Samsung Electronics) and -75.4% (SK hynix). Hanyang Securities explained that this illustrates how leveraged ETF returns can diverge significantly due to repeated price fluctuations.

Hanyang Securities will release this content through various digital channels, including the YouTube channel ‘Hanyang Dictionary’, Instagram card news, and TikTok, and will actively utilize it as financial education content for retail customers. The company plans to help customers improve their financial literacy and make sound investment decisions by explaining the structure and risks of leveraged ETFs and other financial products in a clear and accurate way.

A representative from Hanyang Securities said, "Double-leveraged single-stock ETFs are products that attract significant investor attention, but many investors enter into them without sufficient understanding of their structure. We will continue to expand our financial education offerings to help customers easily understand the characteristics and risks of financial products, and lead the way in promoting a sound investment culture."

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