TRADR ETFs, a U.S. manager of leveraged exchange-traded funds, said Korean investors tend to hold leveraged ETFs longer than their American counterparts and advised them to set a clear exit strategy. Because leveraged ETFs track daily returns, the longer they are held, the more cumulative returns can diverge from exactly twice the return of the underlying asset — making it essential to decide on a loss limit and an exit point before investing.
Matt Markiewicz, head of products and capital markets at TRADR ETFs, said in an interview with The Seoul Economic Daily on the 17th that "Korean investors tend to hold leveraged ETFs longer than U.S. investors," stressing that "a leveraged ETF that tracks daily returns is not a product designed to be held for the long term."
"Investors should not put too large a share of their portfolio into leveraged ETFs," Markiewicz said. "They need to set clear entry and exit prices and decide in advance how much loss they can absorb if the price of the underlying asset falls."
TRADR ETFs is an ETF brand specializing in leveraged and inverse products in the U.S. As of the 16th, its total net assets stood at about $5 billion (about 6.88 trillion won). Of that, Korean investors held $438.3 million (about 603.1 billion won), or roughly 9% of the total.
TRADR ETFs targets retail investors worldwide and is expanding its lineup around highly volatile technology stocks and artificial intelligence names. It recently launched SKHA and SKHN, which track two times and negative two times the daily return of SK hynix's American depositary receipts listed in the U.S.
The firm is also preparing a product aimed at the initial public offering of Anthropic, the privately held AI company. TRADR ETFs plans to make 2x long and short ETFs available for trading from the day after Anthropic lists. "If Samsung Electronics or another Korean company lists shares in the U.S., we will actively consider launching a leveraged ETF on that stock," Markiewicz said. "We launched a 2x leveraged ETF on U.S.-listed Coupang for the same reason."
He cited holding periods and investment decision-making as the main differences between Korean and U.S. investors. "While U.S. investors focus more on technical indicators such as charts and price movements, Korean investors tend to pay attention to a company's growth story and the drivers behind share price gains," he said. "Korean investors are more drawn to momentum."
He said Korea's stock market still has room for further re-rating. "Korea's market has posted the strongest performance in Asia this year, but it remains somewhat undervalued relative to the earnings growth potential of its companies," Markiewicz said. "With supply-demand conditions for memory chips favorable, next-quarter results at Samsung Electronics and SK hynix may also beat market expectations."
He drew a line, however, at the idea that single-stock leveraged ETFs amplify volatility in the underlying shares — the so-called wag-the-dog effect. ETF managers execute the trades needed to maintain their target multiples near the market close, he explained, and trading volume in the underlying stock market is far larger than in the ETFs, making it hard to argue that the funds drive share price movements.
