Mirae Asset Global Investments will list 2x leveraged products on Samsung Electronics and SK hynix on the 27th. The products adopt a cash subscription method to narrow liquidity providers' (LPs) bid-ask spreads and minimize tracking error.
Mirae Asset Global Investments held a press briefing at Mirae Asset Center One Building in Jung-gu, Seoul, on the afternoon of the 26th to introduce the management strategies and investor notes for two "TIGER single-stock leverage" products that will be listed tomorrow.
The TIGER Samsung Electronics single-stock leverage and TIGER SK hynix single-stock leverage that Mirae Asset Global Investments is launching track twice the daily returns of Samsung Electronics and SK hynix. The total fee rate is 0.0901%, and 19 firms each will participate as LPs and APs.
The combined initial creation amount for the two products is about 1.3 trillion won. TIGER SK hynix single-stock leverage accounts for 747 billion won, and TIGER Samsung Electronics single-stock leverage accounts for 597 billion won. Notably, 329 billion won of this was raised in advance from foreign capital.
Mirae Asset Global Investments said it set up the ETF using a cash subscription method. When investors buy or sell the ETF, the manager pays cash to the LP, and based on that, the LP selects and trades the more favorable asset between cash equities and futures depending on market conditions.
Executive Director Lee Jeong-hwan of Mirae Asset Global Investments said, "Under an in-kind creation method, when the manager gives LPs the underlying shares, LPs have to sell the shares, which triggers a security transaction tax," adding, "In contrast, under the cash subscription method, when the manager gives LPs cash, they have the flexibility to acquire cash equities when they are undervalued, or acquire futures when futures prices are undervalued."
Specifically, when cash equities are cheap, the LP buys the shares and a security transaction tax is incurred, but the manager, not the LP, bears this to narrow the bid-ask spread. When futures are cheap, the LP buys futures, which do not incur a security transaction tax, thereby narrowing the bid-ask spread.
Mirae Asset Global Investments also emphasized competitiveness in its futures rollover strategy (replacing expiring futures with the next contract). With the triple-witching day in June approaching, it expects the key edge will be how efficiently it manages rollover expenses. The company plans to respond with an operations framework centered on derivatives experts.
However, it was also noted that, given the characteristics of single-stock leveraged ETFs, high volatility and negative compounding can lead to significant losses in long-term investing. Lee said, "Korea's stock market is in a highly volatile phase, so long-term holding can cause returns to diverge from the underlying asset," adding, "It is advisable to use these as part of a portfolio on a short-term basis."