"If That's the Case, Why Not Just Buy Stocks?" ETFs in Name Only, Now 'Semiconductor-Heavy' and a Playground for Short-Term Traders

From 95 to 29: Diversification Shrinks as Focus on Samsung Electronics and SK hynix Deepens
Number of Constituent Stocks in Domestic Equity ETFs Drops to One-Third in Seven Years
"Short-term Trading on the Rise... Investor Risk Increasing"

The concentration of specific stocks within domestic equity exchange-traded funds (ETFs) is accelerating. As products investing heavily in major stocks such as those labeled 'TOP2' or 'TOP4' continue to be introduced, the average number of constituent stocks in newly listed ETFs has now fallen below 30.

According to Mirae Asset Securities on May 19, the number of stocks included in domestic equity ETFs has been steadily declining. Currently, there are a total of 423 domestic equity ETFs listed on the Korea Exchange. Based on the time of listing, the average number of constituent stocks in these ETFs was 95 from 2002 to 2019, 63 from 2020 to 2024, 39 in 2025, and 29 in 2026.

This change is due to the rapid increase in ETFs that concentrate investments in a small number of stocks, driven by strong buying momentum. From 2022 to last year, while the assets under management (AUM) of ETFs with more than 81 constituent stocks grew by 93.2%, those with 21 to 80 constituent stocks increased by 241.9%, and those with 1 to 20 constituent stocks surged by 347.6%.

This year, which has seen a "semiconductor rally" centered on Samsung Electronics and SK hynix, there has been a noticeable rise in products concentrated in these two stocks. According to ETF Check as of yesterday, out of the 1,107 ETFs listed in Korea, 386 include Samsung Electronics and 391 include SK hynix. This means that roughly one out of every three ETFs contains either Samsung Electronics or SK hynix.

The SOL AI Semiconductor TOP2 Plus ETF, listed in March, surpassed 2 trillion won in net assets in less than three months. This product focuses its investments on SK hynix (27.33%), Samsung Electronics (20.40%), SK Square (18.03%), and Samsung Electro-Mechanics (17.27%), with a total of 11 constituent stocks. Samsung Asset Management has changed the name of the existing KODEX AI Semiconductor ETF to 'KODEX AI Semiconductor TOP2 Plus' and revised its underlying index. The weightings of Samsung Electronics and SK hynix were each raised from 20% to 25%, and the market capitalization criteria for investment targets were increased from 600 billion won to over 1 trillion won. There is also a product (KODEX Top5PlusTR) where the combined holding ratio of these two stocks reaches 67.95%.

If these ETFs continue to scale up, the phenomenon of capital flowing solely into Samsung Electronics and SK hynix—exacerbating the "rich get richer, poor get poorer" effect—could become more pronounced. Yun Jae-hong, a researcher at Mirae Asset Securities, explained, "Many of the newly listed ETFs recently are part of the 'TOP' series. For these ETFs, the proportion of constituent stocks exceeds the market capitalization ratio for the respective industry or theme, so inflows and outflows through these ETFs can intensify this concentration effect."

The asset management industry is concerned that increased volatility and the potential undermining of the core nature of ETFs may result. An official from an asset management firm commented, "In effect, investors are exposed to the memory industry at a rate of about 60%. While it is currently said that the memory sector will continue to boom, unforeseen variables can always arise. If the index plunges and semiconductor stocks fall, investors could face heightened risks."

He added, "The purpose of ETFs is to provide diversification and mitigate volatility, but if this concentration trend persists, ETFs may increasingly be treated like individual stocks, raising concerns about the proliferation of speculative short-term trading and other adverse side effects."

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