Recently in Korea's capital market, "single-stock leveraged ETFs" have sparked controversy as performance gaps have widened to nearly 5 percentage points (p) even though they track the same underlying assets. That is because daily moves differ depending on each asset manager's product structure and order flow right before the market close.
On the 26th, according to the Korea Exchange (KRX), among 14 "single-stock leveraged ETFs" on Samsung Electronics and SK hynix launched by major domestic asset managers, the gap between the product with the highest gain and the one with the lowest, based on the closing price on the 25th, was 5.14 percentage points.
Mirae Asset Global Investments' "TIGER SK hynix Single-Stock Leverage" and Kiwoom Asset Management's "KIWOOM SK hynix Futures Single-Stock Leverage" rose 26.36% and 26.43%, respectively. By contrast, Shinhan Asset Management's "SOL SK hynix Single-Stock Leverage" gained only 21.29%.
Samsung Asset Management's KODEX SK hynix Single-Stock Leverage (25.82%), Korea Investment Management's ACE SK hynix Single-Stock Leverage (+25.64%), and KB Asset Management's RISE SK hynix Single-Stock Leverage (+25.07%), among other leading managers' products, also posted gains around 25%.
Leveraged products on Samsung Electronics also showed performance spreads of more than 1 percentage point by manager. That day, KIWOOM (12.20%) from the same Kiwoom Asset Management and PLUS (10.78%) from Hanwha Asset Management took the top and bottom, respectively, for Samsung Electronics leveraged ETF returns.
The key reason for these performance differences is a temporary mismatch between an ETF's "net asset value (NAV)" and the "closing price" at which it trades in the market. During the session, liquidity providers (LPs) are supposed to keep prices close to fair value through quotes. But the call auction right before the close (3:20 p.m.–3:30 p.m.) is not a mandatory management window, so LP quote provision is limited. If buying or selling concentrates during this brief period, the close can swing sharply regardless of fair value.
Experts noted that, opposite to the previous trading day, the day's surge in the TIGER product (+26.36%) and the relative underperformance of the SOL product (+21.29%) were far more likely due to a premium/discount arising from order imbalances late in the session than to differences in actual asset value.
Structural differences by manager also play a role. Under domestic rules, ETFs that cannot hold only a single stock match their leverage multiple through a mix of "stock + bonds and fixed-rate assets" or via a swap contract with a securities firm.
A person at an asset management firm, identified as A, said, "Market volatility was so high that liquidity providers (LPs) found it difficult to post tight quotes," and added, "LPs' closing price management was somewhat lacking."
A person in the asset management industry, identified as B, said,