14 Out of 15 at the Bottom: "Truly the Outcasts"—Single-Stock Leveraged ETFs Post the Worst Returns

14 Out of 15 Lowest-Performing ETFs Are Single-Stock Leveraged Products
SK hynix Single-Stock Leveraged ETFs Drop Over 30%
Returns Falter Amid Tighter Regulations and Semiconductor Correction
Capital Outflows Continue... 720 Billion Won Lea

The single-stock leveraged exchange-traded funds (ETFs), often criticized as the main culprits behind the increasing volatility in the Korean stock market, have seen their returns fall to the lowest levels. While the government has strengthened regulations on these products and semiconductor stocks continue to adjust, the lackluster performance has resulted in a sustained outflow of funds.

According to the Korea Exchange on August 10, 14 out of the 15 ETFs with the worst returns last week were single-stock leveraged products. TIGER SK hynix Single-Stock Leveraged ETF dropped 33.40%, marking the steepest decline. It was followed by KODEX SK hynix Single-Stock Leveraged ETF (-33.11%), SOL SK hynix Single-Stock Leveraged ETF (-33.10%), RISE SK hynix Single-Stock Leveraged ETF (-33.02%), KIWOOM SK hynix Futures Single-Stock Leveraged ETF (-32.20%), ACE SK hynix Single-Stock Leveraged ETF (-31.97%), and 1Q SK hynix Futures Single-Stock Leveraged ETF (-30.05%). Single-stock leveraged ETFs tracking SK hynix posted losses in excess of 30%. Leveraged ETFs tracking Samsung Electronics, such as ACE Samsung Electronics Single-Stock Leveraged ETF (-24.07%), also recorded declines of 21% to 24%.

On the other hand, inverse ETFs, which deliver double the return when prices fall, performed well. During the same period, SOL SK hynix Futures Single-Stock Inverse 2X ETF rose 43.21%, the best performance among all ETFs. PLUS Samsung Electronics Futures Single-Stock Inverse 2X ETF increased by 18.68%.

The poor performance of single-stock leveraged ETFs is attributed to the ongoing correction in the semiconductor sector. Last week, SK hynix fell by 17.23% and Samsung Electronics declined by 12.0%. During the same period, the KOSPI dropped by 5.01%.

With regulatory tightening and sluggish returns, fund outflows from single-stock leveraged ETFs continue. According to ETFCheck, last week, KODEX SK hynix Single-Stock Leveraged ETF saw a net outflow of 589.3 billion won, the largest among its peers. KODEX Samsung Electronics Single-Stock Leveraged ETF followed with a 271.7 billion won outflow, and TIGER SK hynix Single-Stock Leveraged ETF with 221.3 billion won.

Last week, individual investors were net sellers of KODEX Samsung Electronics Single-Stock Leveraged ETF by 77.2 billion won, KODEX SK hynix Single-Stock Leveraged ETF by 49.9 billion won, SOL SK hynix Futures Single-Stock Inverse 2X ETF by 45.8 billion won, TIGER SK hynix Single-Stock Leveraged ETF by 20.5 billion won, and TIGER Samsung Electronics Single-Stock Leveraged ETF by 17.7 billion won, respectively.

Due to the impact of regulation, the trading value of single-stock leveraged ETFs has dropped sharply. On July 29, the day before the regulation was implemented, the trading value of the 16 single-stock leveraged ETFs exceeded 12 trillion won. By August 7, it had decreased to 845.2 billion won.

Jeon Kyun, a researcher at Samsung Securities, said, "In the first week of August, 715 billion won was withdrawn from domestic asset ETFs, with a significant portion due to outflows from single-stock leveraged products. With the tightening of entry regulations on single-stock leveraged products, 290 billion won has exited from Samsung Electronics leveraged ETFs and 720 billion won from SK hynix leveraged ETFs so far in August."

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