[ETF 400 Trillion Era] ETF Market Quadruples in Three Years, Transforming Korea's Investment Landscape

June 2023: 100 Trillion Won → April 2026: 400 Trillion Won
100 Trillion Won Added in Just Three Months
Average Daily Trading Volume Hits 17 Trillion Won This Year, Triple Last Year’s
Strong Domestic Stock Market and Retirement Pension Funds

The Exchange-Traded Fund (ETF) market has continued its rapid growth, ushering in the era of 400 trillion won in assets. This milestone was reached just three months after surpassing the 300 trillion won mark at the beginning of this year. Accelerated by an unprecedented bull run in the stock market, the ETF market's growth has gained momentum, fundamentally reshaping the investment landscape.

According to the Korea Exchange on April 15, the total market capitalization of ETFs exceeded 400 trillion won during intraday trading for the second consecutive day. As of the previous day's market close, the total net assets of ETFs stood at 398.1367 trillion won, signaling that the 400 trillion won milestone is imminent.

This surge comes just over three months after the 300 trillion won threshold was passed on January 5. Initially, with ETF assets climbing to the 387 trillion won range at the end of February, it was expected that the 400 trillion won mark would be reached in early March. However, the outbreak of war between the United States and Iran led to a stock market correction, delaying the milestone by about a month.

The pace of growth in the domestic ETF market is accelerating. After surpassing 50 trillion won in total net assets in December 2019, the figure exceeded 100 trillion won by June 2023. Approximately two years later, in June 2025, the total surpassed 200 trillion won, and just seven months after that, in January of this year, it crossed the 300 trillion won threshold.

The share of ETF trading volume is also expanding rapidly. The average daily trading volume this year is around 17.4 trillion won, more than tripling last year’s 5.5 trillion won. During the same period, the average daily trading volume of the KOSPI was 29.2 trillion won, a 2.35-fold increase compared to the previous year. The proportion of ETF trading volume relative to the KOSPI has also expanded, rising from 44% last year to about 60% this year.

Bull Run in Domestic Stock Market and Inflows of Retirement Pension Funds Drive High Growth

The explosive growth of the ETF market has been driven by the unprecedented boom in the domestic stock market and the inflow of retirement pension funds. With the KOSPI index breaking through the 6,000 level on the back of strong gains since last year, ETF fund inflows have increased significantly. Additionally, the boom in the semiconductor sector has fueled strong demand for semiconductor-themed investments, which has led to a large influx of capital into related ETFs.

Nam Jaewoo, Head of the Fund and Pension Research Division at the Korea Capital Market Institute, commented, "As the public offering fund market is being reorganized around ETFs, the inflow of new funds has increased recently," adding, "Due to the rise in the domestic stock market and other factors, the number of new participants entering the ETF market, in addition to existing investors and institutions, has grown substantially."

Retirement pension funds have been a core driver behind the explosive growth of ETFs. As the ETF market, which was once centered on short-term trading, became integrated with pension assets, it established a foundation for long-term, installment-based investment. In particular, the inclusion of ETFs in defined contribution (DC) and individual retirement pension (IRP) accounts has led to a shift of pension funds—previously focused on deposits and insurance—toward risk assets. The expansion of ETF investment in retirement pensions is attributed to their low cost, trading convenience, diversification benefits, and suitability for long-term investment.

Seo Joonsik, Professor of Economics at Soongsil University, explained, "Recently, individual investors have been increasingly favoring ETFs, and as the scale of retirement pensions continues to grow, investment focused on ETFs has led to the explosive growth of the ETF market."

Changing Investment Trends with ETFs: Shift from Individual Stocks to Index and Sector Investments

The sharp growth of ETFs is transforming the investment landscape. Whereas selecting individual companies was once the norm, more investors are now choosing to invest in entire markets or sectors through ETFs.

This trend is driven by the perception that investing in an entire sector or index offers better risk management compared to individual stocks, which are subject to greater volatility from company-specific events or earnings.

Reflecting this trend, the 'KODEX 200' ETF managed by Samsung Asset Management recently surpassed 20 trillion won in net assets. Since the introduction of ETFs to the domestic market in 2002, this is the first time a single product has exceeded 20 trillion won in net assets. A Samsung Asset Management representative explained, "KODEX 200, which tracks the KOSPI 200 index, has firmly established itself as a core investment asset in portfolios from individuals to institutions," adding, "It is considered the optimal way to participate effectively in the overall growth of the Korean stock market without the burden of having to select individual stocks."

The financial investment industry views the expansion of the ETF market as more than just a matter of scale. Analysts say that a paradigm shift is underway, as investment approaches, capital flows, and even the structure of the asset management industry are being transformed. An industry insider stated, "ETFs serve not just as financial products, but as platforms that improve investment accessibility," adding, "The expansion of the ETF market will be a long-term factor in changing the structure of the domestic capital market."

The growth of the ETF market is expected to accelerate even further going forward. Professor Seo noted, "Currently, fierce competition among management companies in Korea is leading to the launch of a much wider variety of products compared to other countries," adding, "Moreover, since pension funds and the like are still in their early stages compared to other countries, there is ample room for growth, which bodes well for the ETF market."

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