As Korea's exchange-traded fund (ETF) market grows rapidly this year, the net purchases by individual investors have reached 70 trillion won.
That equals 70% of the buying amount in the main board. Even as the domestic stock market entered a correction this month, individual net buying has been increasing.
According to the Korea Exchange (KRX) and financial data firm Yonhap Infomax on the 26th, individual investors' net purchases of ETFs this year came to 69.5 trillion won as of the 24th, approaching 70 trillion won.
During the same period, individuals' net purchases on the main board totaled 109.9 trillion won. That amounts to 63.2% of the net purchases on the main board. In other words, when individuals invest 10 million won in the main board, they also bought 6.3 million won worth of ETFs.
By quarter, individuals net bought 33 trillion won worth in the ETF market in the first quarter (January–March) alone. They also purchased 28.9 trillion won in the second quarter (April–June). In this month, the start of the third quarter, individuals are continuing net purchases of more than 1 trillion won.
Individual ETF investing is continuing even amid a market correction. Although total ETF net worth, which had soared to 533 trillion won on June 22, fell to 459 trillion won as of July 23, the buying stance of individuals has continued.
In particular, as the KOSPI index pulled back recently and individuals sold 7 trillion won on the main board, they were found to have bought nearly 200 billion won in ETFs.
On the main board, individuals reached a year-to-date peak of 112 trillion won in net purchases as of the 13th. From the 14th to the 23rd, they recorded 7.6 trillion won in net sales. In contrast, over the same period, they added 180 billion won in the ETF market.
As volatility has expanded in the domestic market, some say individual investors reduced the risk of investing in single stocks and shifted their portfolios to relatively stable ETFs.
Indeed, as volatility has widened in the domestic market, changes are appearing in individuals' ETF strategies.
With demand growing to secure regular cash flow rather than capital gains, funds are concentrating in stable "income-type" ETFs such as covered-call and monthly dividend products.
Over the past month (June 23–July 23), about 2 trillion won in individual funds reportedly flowed into covered-call and monthly dividend ETFs on a net basis.