Expansion of Individual Stock Market Participation Boosts ETF Variety: "Achieved Both Quantitative and Qualitative Growth"

[Asia Economy Reporter Oh Ju-yeon] Last year, despite the challenges posed by the COVID-19 pandemic, the domestic Exchange-Traded Fund (ETF) market played a supportive role for the public fund market, achieving both quantitative and qualitative growth. As individual participation in the stock market expanded, the proportion of direct stock investments increased, leading to the launch of numerous ETFs that can be traded on the market like stocks, thereby enhancing product diversity.

According to the Korea Exchange on the 7th, the total net assets of ETFs last year reached 52.0365 trillion KRW, a 0.63% increase from 51.7123 trillion KRW in 2019. Triggered by ultra-low interest rates, high liquidity, and increased market volatility due to COVID-19, the individual investor share in the KOSPI market rose from 47.6% in 2019 to 65.9%. While direct investment by individuals increased, the indirect investment market, represented by equity public funds (76.6 trillion KRW), shrank by 1.9 trillion KRW compared to the previous year. However, the ETF market maintained its growth trend.

With the launch of various ETFs tailored to individual demand, the previous concentration on domestic equity products has also eased. The asset proportion of ETFs tracking domestic market representative indices was 55.7% in 2019 but decreased to 42.0% last year. Meanwhile, sector ETFs increased from 2.9% to 7.5%. Domestic bond ETFs expanded from 7.3% to 10.6%, and overseas equity ETFs grew from 4.5% to 8.1%.

The average daily trading volume also rose by 188.3% compared to 2019, reaching 3.8 trillion KRW. Notably, on March 19, when the stock market plunged due to the COVID-19 impact, ETF trading volume hit a record high of 14 trillion KRW, surpassing the KOSPI stock trading volume of 11.8 trillion KRW on the same day.

As market volatility increased, there was a concentration in leveraged and inverse ETFs that move in line with indices. However, from this year, stabilization measures such as the introduction of basic deposit requirements and mandatory investor education have been implemented. According to the exchange, the trading volume share of leveraged (±2) ETFs peaked at 65.5% in March last year but decreased to 58.8% after the implementation of these stabilization measures.

It is also notable that various New Deal index-based products were listed in response to the government’s K-New Deal policy.

Products related to K-New Deal sectors such as Bio, Battery, Internet, and Games (BBIG) account for only 11.8% within the domestic sector ETFs but represent 25.4% of the net asset value. The total net asset amount also increased by about 800 billion KRW compared to the original listing amount.

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