South Korean Retail Investors Hit by Heavy Losses in Leveraged ETFs
Retail investors in South Korea have poured $9.45 billion into single-stock leveraged ETFs since May, with many suffering significant losses as volatility whipsawed returns.
South Korean retail investors have placed roughly $9.45 billion into single-stock leveraged exchange-traded funds since their introduction on 27 May. The products, which use derivatives to multiply daily returns of individual stocks, have drawn strong interest but delivered painful results for many.
Volatility in the underlying shares has amplified moves in both directions, leading to substantial losses for holders. The structure of these funds means that even small fluctuations can quickly erode capital, especially when held for more than one trading session.
The heavy inflows highlight the appetite for high-risk, high-reward strategies among individual investors in Korea, but the steep declines underscore the dangers of leveraged single-stock exposure in choppy markets.
Source: First Squawk