South Korea’s experiment with single-stock leveraged ETFs has gone about as well as handing a toddler a flamethrower. Products tracking Samsung Electronics and SK Hynix, the country’s two semiconductor titans, have seen their assets under management collapse by roughly 50% from peak levels, leaving a trail of retail losses and regulatory scrambling in their wake.
The funds, which launched on May 27 on the Korea Exchange, attracted an astonishing 14 to 15 trillion won (around $9.4 to $10.4 billion) in net inflows from retail investors in the weeks following debut.
From moon to crater in sixty days
Sixteen single-stock ETFs, primarily offering 2x daily leveraged exposure to Samsung and SK Hynix, hit the market and immediately drew a tidal wave of retail money. Combined AUM peaked at roughly 17 trillion won, approximately $11 to $12 billion.
The largest product, the KODEX SK Hynix Single Stock Leverage fund, peaked at around $3.4 billion in AUM before tumbling approximately 45% from its debut price. Multiple products across the lineup fell even harder, with share prices dropping from around 20,000 won at listing to below 10,000 won by late July.
