NH Investment & Securities analyzed on the 17th that Korea's exchange-traded fund (ETF) market has grown rapidly since 2020 but still has room to expand compared with the boom in installment-type funds in 2007.
Ha Jae-seok of NH Investment & Securities said, "The net worth aggregates (AUM) of the domestic ETF market, which has been growing rapidly since 2020, has surpassed 370 trillion won," and noted, "There is a trend of individual investors selling cash equities and buying ETFs, expanding indirect investment."
However, compared with the 2007 boom in installment-type funds, capital inflows are still seen as low. Ha said, "During the 2007 boom in installment-type funds, 19 trillion won, equivalent to 1.8% of market capitalization, flowed into Korea's equity funds," and added, "This year, capital inflows into domestic equity funds, including ETFs, amount to 29 trillion won, but that is only about 0.6% of market capitalization."
In this regard, he also projected strong potential for expanding ETF investment through retirement pensions. Ha said, "The size of Korea's retirement pension reserves is growing about 15% per year and is expected to reach 1,000 trillion won by 2030," and added, "Within retirement pensions, performance-based products, including bond funds, are estimated at about 25%, with equities only around 10%."
He added, "Given that equities account for more than 50% of retirement pensions in advanced economies such as the United States and Australia, there is ample capacity to buy equities via ETFs in retirement pension accounts going forward."
Meanwhile, ETFs are increasingly influencing the domestic stock market. He said, "Since the start of the year, average daily ETF transaction value has risen to 58% of KOSPI transaction value, and single-stock leveraged ETFs for Samsung Electronics and SK hynix are also set to launch," and advised, "Investors should be cautious, as price volatility could increase, especially among smaller market-cap stocks held by ETFs."