The number of exchange-traded funds (ETFs) listed on the domestic securities market has surpassed 1,000. The first ETF appeared in Korea in 2002, and this milestone comes about 23 years later. As ETFs emerge as key financial investment products, their net worth is also rapidly increasing.
However, assessments continue to indicate a relative lack of product diversity compared to the U.S. market. The competition for market share among asset management companies, which has led to cutthroat competition, is also seen as an issue that needs improvement.
According to the Korea Exchange on the 22nd, seven ETFs including The J Small-Mid Focus Active, KODEX TDF2060 Active, KIWOOM U.S. Tech 100 Monthly Target Hedge Active, 1Q U.S. Medical AI, ACE U.S. 10-Year Treasury Active, ACE U.S. 10-Year Treasury Active (H), and PLUS U.S. Robo Taxi were newly listed on that day. Consequently, the total number of ETFs traded in the domestic market has increased to 1,002.
The size of the ETF market is growing rapidly. In just three years, the number of items has increased by over 400, and during the same period, the net worth has surged from 74.9822 trillion won to 221.4292 trillion won, nearly tripling.
The number of ETFs in transaction surpassed 800 for the first time in November 2023, and it took 11 months to exceed 900 in October of last year. The milestone of 1,000 was achieved in just nine months.
In terms of operational types, the passive type that follows a benchmark index constitutes 73.3% (734 items). The active type, where fund managers intervene to aim for excess revenue relative to the benchmark index, accounts for 26.7% (268 items).
When divided by underlying assets, domestic equity funds account for the largest share at 38% (381 items). This is followed by foreign equity funds at 31.4% (315 items), domestic bond funds at 11.7% (117 items), and foreign bond funds at 4% (40 items). As the number of overseas stock individual investors has increased, foreign equity ETFs are rapidly growing.
ETFs utilizing options strategies, including covered calls, are also emerging. This year, Samsung Asset Management launched a 'buffer' type ETF that can cushion some losses in a highly volatile market, while Kiwoom Asset Management introduced a 'protective put' ETF that adjusts the ratio of U.S. stocks to short-term bonds to establish a downturn defense line.
However, there are still evaluations indicating that the diversity of ETFs has a long way to go. Industry insiders point out that the Korea Exchange, which reviews ETFs, maintains a conservative stance prioritizing stability, making it difficult for new structure ETFs to meet listing requirements.
An executive from an asset management company noted, 'In the U.S., there are many unique products like ETFs that are formed based on assets that have increasing search volumes, but such considerations are not easily accepted domestically.'
Despite the fierce competition among asset management companies, there are considerable concerns. When a competitor's ETF becomes popular, similar structured products frequently emerge. Particularly among larger firms, competition to reduce management fees has ensued, placing passive ETFs in a position where they are treated as loss-making products by smaller companies.
Another asset management company representative commented, 'For smaller asset management firms, the passive ETF market is a challenging environment to even enter,' adding, 'In terms of management quality, receiving appropriate fees is the right direction to take.'