[Edaily Reporter Park Sun-Yeop ] Concerns are growing over the potential for increased market volatility as retail investor funds rapidly flow into single-stock leveraged exchange-traded funds (ETFs) based on SamsungElectronics(005930)and SK hynix(000660). While it is difficult to conclusively state that these products themselves are the direct cause of the recent volatility in semiconductor stocks, analysts have pointed out that as the size of assets under management grows due to rising stock prices, rebalancing trades by these ETFs could amplify stock price fluctuations.
Jang Geun-hyuk, a senior research fellow at the Korea Capital Market Institute, made these remarks in a report titled “Stock Market Trends and Implications Before and After the Launch of Single-Stock Leveraged and Inverse ETFs,” released on the 30th. The report analyzed retail investor capital flows as well as changes in trading volume and volatility for the two stocks from May 27—when the single-stock ETFs for SamsungElectronics and SK hynix were launched—through June 19.

According to the report, following the launch of single-stock ETFs, funds from retail investors flowed in rapidly, primarily into leveraged ETFs. From the launch date through June 19, the cumulative net purchases by retail investors in leveraged ETFs reached approximately 8.2 trillion won. Of this amount, 4.6 trillion won flowed into the SK hynix leveraged ETF and 3.7 trillion won into the SamsungElectronics leveraged ETF. In contrast, net purchases of the 2x inverse ETF amounted to only about 300 billion won.
As capital inflows coincided with rising stock prices, assets under management (AUM) also grew rapidly. As of June 19, the AUM of leveraged ETFs had increased to 9.15 trillion won for SK hynix and 5.22 trillion won for SamsungElectronics. Research Fellow Jang noted, “Since AUM includes holdings by liquidity providers (LPs), not all of it directly reflects market impact,” but estimated the market value of holdings by retail investors at 6.6 trillion won for SK hynix and 4 trillion won for SamsungElectronics.
Following the launch of single-stock ETFs, changes also emerged in capital flows within the existing ETF market. Excluding single-stock ETFs, the average daily net purchase amount by retail investors for all other ETFs fell sharply from 551.9 billion won before the launch to 116.4 billion won in the first week after launch. Although it subsequently recovered somewhat to around 170 billion won, there were clear signs that retail funds, which had previously been flowing into other ETFs, shifted toward single-stock ETFs immediately after the launch.
The shift was particularly pronounced among domestic semiconductor ETFs. During the 20 business days prior to the launch, domestic semiconductor ETFs accounted for 3.4 trillion won—or 31%—of the total cumulative net purchases of 11 trillion won across all ETFs; however, they shifted to net sales following the launch of the single-stock ETF. Domestic semiconductor ETFs, which had seen average daily net purchases of 171.7 billion won prior to the launch, shifted to average daily net sales of 286.6 billion won in the first week following the launch.
Net selling also expanded among KOSPI index ETFs, particularly in leveraged products. Conversely, funds flowed into KOSDAQ index ETFs. While retail investors had recorded an average daily net selling of 68.5 billion won in KOSDAQ index ETFs prior to the launch, they shifted to an average daily net buying of 150 billion won during the first week after the launch. This trend contrasts with the expansion of retail net selling in the KOSDAQ stock market during the same period.
Research Fellow Jang commented on this, stating, “Immediately after the launch of the single-stock ETF, we observed a phenomenon where funds flowed out of domestic semiconductor ETFs and overall net buying of ETFs decreased.” He added, “Although a trend toward increased net selling was evident in the KOSDAQ market as well, funds flowed into KOSDAQ index ETFs, so when viewed from the perspective of the KOSDAQ market as a whole, the change in capital flows was not significant.”
The issue is that single-stock ETFs can structurally amplify volatility. Leveraged ETFs must make additional purchases when stock prices rise and additional sales when prices fall in order to track twice the daily return of the underlying asset. This structure causes rebalancing trades—intended to maintain the target exposure ratio—to occur in the same direction as the stock price movement.
The report cited the example of the SK hynix leveraged ETF on June 19. At that time, the SK hynix leveraged ETF’s AUM as of the previous day was 8.7 trillion won, and as SK hynix’s stock price rose 2.9% that day, it was estimated that additional purchases of approximately 260 billion won in spot shares and 270 billion won in futures contracts occurred. In other words, a rise in the stock price leads to additional ETF purchases, and these purchases can in turn increase upward pressure on the stock price.
However, the estimated amount of spot rebalancing as a proportion of the day’s trading volume has been limited so far. In absolute terms, it averaged 1.6% for SamsungElectronics and 2.1% for SK hynix. Generally, the figures remained within the range of 1–3% for SamsungElectronics and 1–4% for SK hynix.
Nevertheless, Research Fellow Jang pointed out that attention should be paid to the pace of AUM growth. Since the net asset value (NAV) of leveraged ETFs moves at twice the rate of stock price changes, AUM grows rapidly during stock price rallies even without additional capital inflows. In fact, the AUM of the SK hynix leveraged ETF increased by 4.31 trillion won, from 4.84 trillion won on June 10 to 9.15 trillion won on June 19. Of this increase, approximately 3.6 trillion won was estimated to be due to the rise in NAV.
As AUM grows, the volume of rebalancing trades increases even with the same stock price fluctuations. This means that if the current trend continues, the ratio of rebalancing trades to total trading volume will rise, and the impact on volatility could also expand. Around futures expiration dates, rollover trades—where positions are transferred from the current contract month to the next—also tend to concentrate, which can act as an additional source of volatility.

However, analysts also noted that it is difficult to attribute the recent increase in volatility for SamsungElectronics and SK hynix solely to the impact of single-stock ETFs. According to the report, SK hynix’s volatility rose from 90% to 101% following the launch of single-stock ETFs. During the same period, the volatility of the Philadelphia Semiconductor Index rose from 46% to 75%, while Micron’s volatility rose even more sharply, from 85% to 126%. The volatility of the S&P 500 also increased from 14% to 17%.
Research Fellow Jang explained, “While the rise in volatility for these two stocks may be partly due to the impact of rebalancing trades in single-stock ETFs, it can be viewed as the result of a combination of factors, including increased volatility in the global semiconductor sector and macroeconomic uncertainty.”
It was also noted that retail investors’ trading behavior could partially mitigate the impact of rebalancing. Since the first week of launch, retail investors have exhibited a contrarian trading tendency: buying more single-stock leveraged ETFs when stock prices fall and reducing net purchases when prices rise. This acts in the opposite direction of ETF rebalancing trades—which move in the same direction as stock prices—and can thus reduce market shocks.
However, the report emphasized the need to be mindful that risks may increase following a rise in stock prices. Research Fellow Jang stated, “Considering that the AUM of leveraged ETFs is increasing due to the rise in NAV resulting from the recent stock price gains, the impact of rebalancing trades could gradually grow,” adding, “It is necessary to continuously monitor future trends in AUM growth and the impact of rebalancing trades during periods of volatility.”
He added, “Investors also need to be mindful of risk management, taking into account the possibility that risks may increase following a rise in stock prices, as well as the risk of concentration in specific stocks.”