Nasdaq and S&P ETFs Flood Market... "Target Retirement Pensions"

Recent Launches of US and European Major Index Tracking ETFs
Products Targeting Seohak Gaemi and Retirement Pension Demand
Tax Benefits When Investing Through Retirement Pension Accounts
Potential Drawback: Profit Decline Due to Exchange Rate Fluctuations

[Image source=AP Yonhap News]

[Asia Economy Reporter Junho Hwang] Recently, ETFs investing in representative indices of the U.S. and Europe have been launched in a flood.

According to the financial investment industry on the 14th, last week the asset management industry's big three (BIG3) ? Mirae Asset Global Investments, Samsung Asset Management, and KB Asset Management ? consecutively released products investing in major indices such as the U.S. Nasdaq, S&P 500, and Europe's Euro Stoxx 50. Each company launched two products, totaling six products.

These products can be seen as catering to investors with increased interest in overseas markets like Tesla and Apple, but especially the asset management industry is targeting retirement pension demand. An industry official explained, "More people are investing in ETFs through pension accounts, and there is a strong tendency to invest mainly in products tracking global representative indices, which seems to be why these products are being launched one after another."

Although there have been many products tracking overseas representative indices before, most were futures-based products. Since futures-based ETFs cannot be invested in within retirement pension accounts, spot-based ETFs are being launched one after another.

From an investor's perspective, investing through a retirement pension account maximizes benefits.

When trading through a general account, a dividend income tax of 15.4% is imposed. Furthermore, if the total financial income exceeds 20 million KRW, comprehensive financial income taxation may apply. On the other hand, investing through a retirement pension account exempts these taxes. However, when receiving the pension after age 55, only a pension income tax of 3.5?5.5% applies, allowing for tax deferral benefits.

However, caution is needed as most ETFs investing in the U.S. market are currently currency-exposed. This means that exchange rate fluctuations can affect ETF prices and investment returns.

An industry official urged, "Individual investors sometimes decide to invest solely based on the possibility of index growth, but it is necessary to make decisions considering exchange rate fluctuations."

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