ETF fever shows no sign of abating as 15 break 1-trillion-won mark

Korean retail investors continue to rush into equities via exchange traded funds (ETF), and at least 15 ETFs now have more than 1 trillion won ($874 million) in assets.

A 42-year-old investor who recently bought ETFs for the first time in his life committed 7 million won to them. One invests in fuel-cell-battery-related plays, including LG Chem, and another invests in the Kospi 200.

“I took an interest in ETFs as the local and overseas stock markets have become volatile,” he said. “It’s reassuring to investment in ETFs that invest in groups of companies that show strong growth potential.”

According to the Korea Exchange, the net assets of the 497 ETFs trading locally as of Aug. 2 was 60.1 trillion won. That’s a 16-percent increase compared to the beginning of this year or nearly 8.1 trillion won.

Two years ago, ETF assets totaled 40.3 trillion won.

An ETF is a mutual fund that trades like a stock on a public market.

Unlike normal mutual funds, ETFs are easy to buy and sell and the commission charges are relatively low, at around 0.5 percent.

Recently, massive ETFs with net assets of over 1 trillion won have been appearing. As of Aug. 2, there were 15 such ETFs, which is a stark contrast to two years ago when there were only eight.

The biggest is Samsung Asset Management’s Kodex 200 ETF, with 4.1 trillion won of assets.

Theme ETFs are on the rise.

Among the top 10 ETFs that drew the most investment in the last three months, seven were investing in companies with specific themes.

In the last three months, 280 billion won of investment poured into Mirae Asset’s Tiger ETF fund investing into the INDXX US Top 10.
The index includes the top 10 U.S. companies traded on the Nasdaq, including Apple, Microsoft, Amazon and Facebook.

Mirae Asset’s China Electric Vehicle Solactive ETF in the last three months attracted 125.8 billion won of fresh funds.

The ETF, which invests in China-related EVs traded on Chinese and U.S. markets, has more than 1 trillion won in assets.

“With Covid-19, technology development has been on the rise and there are now more investors taking notice of industries that are showing strong growth,” said Kim Hoo-jeong, a Yuanta Securities analyst. “For the time being, the popularity of ‘themed’ ETFs is likely to continue.”

BY YEOM JI-HYEON [lee.hojeong@joongang.co.kr