Returns on W2 Trillion Leveraged ETFs Halve in Just One Month

The returns of leveraged ETFs—exchange-traded funds that amplify index movements—into which more than 2 trillion won of retail money has poured have fallen nearly in half in just one month. Investors who bought at lower prices in hopes of a rebound saw their losses grow even larger, and not a single one of the top 10 ETFs most heavily bought by individuals posted a positive return.

According to Koscom's ETF Check, the product individual investors bought most heavily on a net basis over the past month was KODEX Leveraged, which drew in 1.2201 trillion won. The fund, which tracks the daily return of the KOSPI 200 index at twice the pace, saw its losses balloon during the market downturn, posting a return of minus 45.36 percent over the period. The second-most net-bought product was also a leveraged fund. Individuals net-bought 941.1 billion won worth of KODEX KOSDAQ 150 Leveraged, but its return came in at minus 48.79 percent.

Losses were even steeper for investors betting on a rebound in semiconductor stocks. KODEX Semiconductor Leveraged, ninth on the list of retail net purchases, attracted 257.2 billion won but posted a return of minus 64 percent. The story was no different in the U.S. market. TQQQ, which tracks the daily return of the Nasdaq 100 index at three times the pace, fell 18.92 percent in regular U.S. trading on Tuesday, local time. TQQQ ranks ninth among U.S. stocks by holdings of domestic (Korean) investors.

Behind the plunge was heavy selling centered on semiconductor stocks, driven by heightened concerns over possible tighter U.S. regulation of AI data centers following the midterm elections. "The crash in U.S. AI stocks has a strong panic-selling character, given that the specific scope of any regulation, whether investments will actually be delayed, and any decline in AI demand have yet to be confirmed," analyzed Han Ji-young, a researcher at Kiwoom Securities.