Exchange Lists Two New Thematic ETFs on Semiconductor and Water Resource Infrastructure

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[Asia Economy Reporter Myunghwan Lee] The Korea Exchange announced on the 15th that it plans to list Mirae Asset Global Investments' 'TIGER US Philadelphia Semiconductor Leverage (Synthetic)' and NH-Amundi Asset Management's 'HANARO Global Water MSCI (Synthetic)' exchange-traded funds (ETFs) on the KOSPI market on the 19th.

The TIGER US Philadelphia Semiconductor Leverage (Synthetic) ETF is expected to serve as an alternative investment vehicle that can satisfy demand, which had been concentrated on overseas-listed semiconductor leverage ETFs, within the domestic market. According to data from the Korea Securities Depository, the 'Direxion Daily Semiconductor Bull 3x ETF (SOXL)' ranked third in total foreign currency stock settlement amounts by domestic investors last year, with $9.3 billion (approximately 11.4 trillion KRW).

Notably, this product is the first ETF to invest with leverage in a specific sector among overseas stocks. Existing overseas stock leverage ETFs have been limited to market benchmark indices such as the Standard & Poor's (S&P) 500 and CSI 300.

The HANARO Global Water MSCI (Synthetic) ETF focuses on global companies related to water resource infrastructure investment and water treatment businesses, sectors expected to experience high growth in the future. The Korea Exchange explained that since there are currently no products specializing in water resources investment domestically, this ETF is expected to contribute to expanding the product lineup in the domestic ETF market.

Meanwhile, currency-exposed ETFs do not perform separate currency hedging due to their characteristics, which means they may be exposed to exchange rate fluctuation risks in the future. Synthetic ETFs operate using over-the-counter derivative contracts with counterparties, which incur additional costs. Investors should be aware that these costs can cause discrepancies between index performance and fund performance.

Investors should also exercise caution when investing in leverage ETFs. A Korea Exchange official advised, "Leverage ETFs can amplify not only gains but also losses by more than twice, making them higher-risk products compared to regular ETFs. When the underlying index fluctuates repeatedly, the difference between the cumulative return of the underlying index and the period return can widen further, so caution is necessary."

The Korea Exchange plans to provide daily asset composition details (PDF) through the KOSCOM CHECK terminals and on the websites of the exchange and asset management companies to help investors better understand these products.

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