Last Year, ETF Market Net Asset Value Exceeded 120 Trillion Won... 54.2% Growth

Based on continuous new product supply and capital inflow, the total net assets of the exchange-traded fund (ETF) market exceeded 120 trillion won last year, showing a growth of more than 50% compared to the previous year.

According to the Korea Exchange on the 4th, as of the end of last year, the total net assets of the ETF market recorded 121 trillion won, an increase of 54.2% compared to the end of the previous year (79 trillion won). After surpassing 100 trillion won at the end of June last year, it reached an all-time high of 121.4 trillion won at the end of November. Considering that the global ETF market's net asset size increased by 19% compared to the previous year as of the end of November, this represents a steep growth rate.

The top two ETFs by total net assets were TIGER CD Geumri Investment KIS (Synthetic) (6.7 trillion won) and KODEX 200 (6.6 trillion won), accounting for 10.9% of the entire ETF market. The number of ETFs with total net assets exceeding 1 trillion won increased by four to 26 compared to the previous year.

Last year, 160 new ETFs were listed, breaking the record again following 2022, and the total number of listed ETFs reached 812 by the end of 2023. Among the newly listed ETFs, active ETFs accounted for 73, or 46%, indicating a continued expansion of products targeting investors expecting returns exceeding benchmark indices. Additionally, reflecting investors' short-term fund management demand amid the ongoing high-interest-rate trend, 11 new interest rate ETFs were listed, including certificates of deposit (CD), Korea Overnight Financing Rate (KOFR), and Secured Overnight Financing Rate (SOFR). As a result, the number of interest rate ETFs increased from 3 last year to 14 this year. Furthermore, various thematic ETFs in high-growth sectors such as secondary batteries, artificial intelligence (AI), Tesla value chain, and biotechnology were listed, expanding the product lineup.

With the rise in the base interest rate, investment demand seeking stable interest income increased, and capital inflows were mainly concentrated in interest rate ETFs. The top ETF by annual cumulative capital inflow through subscriptions and redemptions last year was KODEX CD Geumri Active (Synthetic), which attracted 5.8214 trillion won. It was followed by TIGER KOFR Geumri Active (Synthetic) (4.667 trillion won), TIGER CD Geumri Investment KIS (Synthetic) (3.0523 trillion won), KODEX 24-12 Bank Bonds (AA+ or higher) Active (2.4419 trillion won), and KODEX KOFR Geumri Active (Synthetic) (1.3426 trillion won).

Last year, the average daily trading value of the ETF market was 3.2 trillion won, a 15.3% increase from 2.8 trillion won the previous year. During the same period, the average daily trading value of the KOSPI market increased by 6.7%. The ETF market's average daily trading value accounted for 33.4% of the KOSPI market's trading value, up 2.5 percentage points from 30.9% the previous year.

By investor type, the trading share of institutions increased compared to the previous year, while the shares of individuals and foreigners relatively decreased. Last year, institutions accounted for 35.3% of trading, up 7.8 percentage points from the previous year. Individuals accounted for 45.3%, down 0.6 percentage points, and foreigners accounted for 19.4%, down 7.2 percentage points.

The average ETF return last year was 15.4%, with more rising ETFs (518) than falling ones (134). The top cumulative return was recorded by TIGER US Philadelphia Semiconductor Leverage (Synthetic) with a return of 171.2%. Due to the stock market recovery in the second half of the year, the top five ETFs by cumulative returns domestically and internationally were leveraged ETFs of US semiconductors, Nasdaq, and KOSDAQ indices.

By product type, both total net assets and average daily trading value increased in domestic and international categories last year, with a notable increase in net assets of interest rate ETFs such as KOFR and CD. The average daily trading value of leverage and inverse products decreased compared to the previous year, indicating a reduction in speculative demand and a higher proportion of investors seeking stable returns.

In the global market last year, the Korean ETF market ranked 4th in the number of listed ETFs (2nd in Asia), 11th in total net assets (4th in Asia), and 3rd in average daily trading value (2nd in Asia). With 160 new listings and 14 delistings last year, 146 ETFs were added, raising the total number of listed ETFs by one rank compared to the previous year, and total net assets also rose by one rank. The average daily trading value remained 3rd, following the US and China.

The exchange-traded note (ETN) market saw its total indicative value exceed 13 trillion won last year, with the number of listed ETNs increasing to 375. The indicative value approached 14 trillion won, a 42.3% increase from 9.7 trillion won the previous year. A Korea Exchange official explained, "The annual indicative value increased by more than 4 trillion won, showing quantitative growth and the highest growth rate since 2018, demonstrating strong growth."

The number of listed ETNs increased by 9 compared to the previous year, with the number of currency and bond ETNs rising, while the number of stock and commodity ETNs decreased.

Last year, the average daily trading value of the ETN market was 158.9 billion won, a 4.8% increase from 151.6 billion won the previous year. For the first time, the average daily trading value of domestic-type products (99.4 billion won) significantly exceeded that of overseas-type products (59.5 billion won). A Korea Exchange official analyzed, "Domestic-type products centered on market representative indices were actively traded, alleviating the market concentration on overseas commodities."

The average daily trading values of stock and commodity underlying asset products accounted for most of the trading at 99.8 billion won (62.8%) and 50.2 billion won (31.6%), respectively. Stocks were mainly traded based on the KOSDAQ market representative index, and commodities were centered on natural gas and crude oil.

The trading share of institutions decreased by 11.3 percentage points compared to the previous year, while the share of foreigners increased by 10.3 percentage points.

The average ETN return last year was 11.7%, with more rising ETNs (154) than falling ones (137). The top cumulative return was recorded by KB Leverage FANG Plus ETN(H) with a return of 269.1%. Among the top five annual return ETNs last year, except for the first-ranked product, all were natural gas ETNs, with inverse "double short" products showing high returns due to a sharp drop in underlying asset prices.

Last year, the number of delisted ETNs increased to 73, returning to the 2021 level (70). In 2022, there were 27 delistings. A Korea Exchange official explained, "While new listings decreased, delistings increased, leading to a reorganization of the product lineup centered on investment demand. Issuers voluntarily applied for delisting of products with low investor holdings and low trading volume, resulting in an increase in delisted products."

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