Due to considerable volatility in the local stock market, money has started leaving 'safe-haven' type exchange-traded funds (ETFs) that have historically provided security for investors. At the same time, ETFs centered around semiconductors—the main contributors to the bullish trend—are experiencing large amounts of investment. Experts believe that investors are actively placing their bets on semiconductor-related ETFs, specifically those following leading companies such as Samsung Electronics and SK Hynix, instead of simply watching how the market develops.
◇ ETFs Focused on Parking Experience Significant Net Withdrawals of Billions
As reported by ETF Check on July 2, the leading parking-type ETF, KODEX Money Market Active, experienced a net withdrawal of 937.2 billion South Korean won during the previous week, standing at second place overall among all ETFs. In the same timeframe, TIGER Money Market Active and TIGER CD Interest Investment KIS faced net withdrawals of 325.9 billion and 250.5 billion South Korean won, respectively, securing positions four and five. These money market active ETFs focus on extremely short-term bonds maturing within a year, along with commercial paper and corporate debt instruments. The TIGER CD Interest Investment KIS follows the yield trends of transferable bank certificates of deposit (CDs) and falls into the category of ultra-short-term interest rate ETFs. Both funds belong to the parking-type ETF group, providing somewhat better yields compared to regular savings accounts but carrying less financial risk, which makes them ideal for temporary cash management.
Usually, parking-style ETFs receive investments when the market is unstable or unclear, and face withdrawals during robust bullish periods. However, this time, even with significant market swings, leading parking-type ETFs are witnessing net outflows amounting to tens of billions of won. An insider from the finance sector stated, "In March, during market turbulence, parking-type ETFs drew in idle capital, but currently, anticipation for a stock market surge driven by semiconductors and artificial intelligence has increased significantly. Large-scale withdrawals from these ETFs indicate that investors believe in continued market growth, especially a rise fueled by semiconductors."
◇ Concentrated Investments Flow into Semiconductor Exchange-Traded Funds
On the flip side, semiconductor-related exchange-traded funds have experienced significant purchasing activity. In the last seven days, leveraged and focused semiconductor ETFs led in terms of net inflows. The leading fund, KODEX SK Hynix Single-Stock Leveraged, drew in 1.0698 trillion South Korean won. Next was TIGER Semiconductor TOP10 with 967.3 billion South Korean won, then TIGER SK Hynix Single-Stock Leveraged at 830.1 billion South Korean won, followed by KODEX Samsung Electronics Single-Stock Leveraged with 752.2 billion South Korean won, and finally SOL AI Semiconductor TOP2 Plus which received 742.4 billion South Korean won.
Securities companies expect the focus on semiconductors within ETFs to remain strong. Ha Jae-seok, a researcher from NH Investment & Securities, stated, "ETFs heavily focused on Samsung Electronics and SK Hynix are quickly expanding in the local ETF market. Due to their comparatively low valuations and ongoing profit growth, this trend is expected to continue for now."
◇" ETFs Focused on Parking Deserve Notice Amid Rising Interest Rates
Nevertheless, despite the significant fluctuations in the market and the ongoing increases in interest rates, parking-style ETFs continue to offer attractive investment opportunities. As benchmark rates go up, so do short-term rates, allowing Money Market Active ETFs to achieve better performance through the inclusion of newly issued ultra-short-term instruments. TIGER CD Interest Investment KIS also gains advantages from increasing CD yields, thereby enhancing interest earnings. Put simply, returns from parking-type ETFs typically increase when interest rates rise.
A person working within the finance sector stated, "When interest rates rise, capital might shift towards parking-style ETFs, which provide comparatively higher yields with shorter terms, rather than unstable equities or long-duration bonds. Although the present surge in semiconductors and artificial intelligence is causing investors to move their assets from these parking-type ETFs toward semiconductor-focused ones, should interest rate increases quicken, such ETFs could once again become secure options for cash awaiting investment." Others recommend keeping an eye on USD-based parking-type ETFs, which can protect against exchange-rate fluctuations while still gaining advantages from rising rates.