[비즈한국] As the KOSPI index breaks past the 3000-point mark, retail investors' buying fervor is intensifying. Some are even calling it the "second Donghak Ant Movement." Recently, there has been active net buying in issue- and theme-driven stocks, ranging from AI-related stocks like Naver and SK Hynix000660, to nuclear power-related stocks like Doosan Enerbility034020, and stablecoin-related stocks like Kakao Pay377300.
However, retail investors, feeling the burden of high stock prices, are turning their eyes toward indirect investment through Exchange Traded Funds (ETFs) instead of individual stocks. ETFs are gaining popularity among investors for their diversification effects, low costs, and ease of following specific indices or themes.
In particular, ETFs are emerging as an attractive alternative for investors seeking to benefit from government industrial policies or theme-based gains.
Kang Jin-hyuk, a researcher at Shinhan Securities, stated, "Outside of major indices, ETFs are currently centered on finance, dividends, and holding companies," adding, "These are sectors where there is a risk in stock selection because identifying the best performers among policy-beneficiary stocks can be difficult." Researcher Kang noted, "One can view the use of ETFs as a way to avoid FOMO (Fear Of Missing Out) resulting from poor individual stock selection and to bet on policy directions."
The domestic ETF market exceeded 200 trillion won in June, and the number of products surpassed 1,000 as of the 22nd. Among them, a notable recent trend is the rapid rise of "Option ETFs."
In the United States, Covered Call and Buffer ETFs are already widely used for retirement asset management. They are structured to seek a certain level of return while defending against downside risk. They attract investors by providing monthly distributions or limiting losses to a certain range.
Kim Jin-young, a researcher at Kiwoom Securities, said, "Over the past 2–3 years, while navigating high interest rates and volatile markets, various strategic products have been launched, proving the scalability and flexibility of ETFs. Option ETFs have played that role effectively," adding, "It can be said that they have succeeded in translating areas of investment once considered the exclusive domain of institutions and professional investors into products accessible to retail investors."
Reflecting this trend, "option-replicating ETFs" that incorporate loss-defense strategies have recently appeared in Korea. The "KIWOOM US Tech 100 Monthly Target Hedge Active" ETF, launched by Kiwoom Asset Management on the 22nd, is characterized by investing in tech stocks included in the US Nasdaq 100 index while simultaneously using a defensive strategy to reduce losses if the stock price falls.
Unlike general tech stock ETFs, this product is designed based on a "Protective Put" strategy. Simply put, it is a structure that prepares for a decline in stock prices by buying a put option while purchasing the stocks. However, it does not buy actual options; instead, it creates a portfolio that acts like an option through a "delta-hedge replication technique."
On the 1st of every month, the hedge ratio is recalculated and the portfolio is rebalanced by applying the closing price of the underlying index from the end of the previous month to the option strike price. It limits the scope of losses by adjusting the weight of the asset class based on the closing price of the underlying index from the end of the previous month. When the stock price rises, it increases the stock portion up to 95% to pursue profit, and when the stock price falls, it increases the bond portion to limit losses.
Ultimately, a "bidirectional strategy" is possible, seeking profit in a bull market and reducing losses in a bear market. Since it does not actually buy options, it avoids option purchase costs, which is an advantage compared to typical option strategies. The total ETF expense ratio is 0.49%, which is relatively stable for an actively managed strategy.
In this way, investment methods using derivative strategies are becoming increasingly sophisticated in the domestic ETF market. Since the first covered call ETF was launched in 2012, first-generation covered call ETFs, which aim for stable dividends by selling call options in response to increased market volatility, gained prominence from 2022 to 2023. Subsequently, second-generation covered call ETFs that more actively track bull markets appeared in large numbers last year, and in March of this year, the range of derivative strategies widened with the launch of buffer-type ETFs that combine put option spreads with covered call strategies.
These attempts to incorporate option strategies into ETFs are evolving beyond simple index tracking to allow for responses according to market conditions. However, since these ETFs seek stability rather than maximizing returns in a bull market, their returns may be relatively lower than those of general ETFs. Nevertheless, they can be a valid choice if you have a great fear of poor individual stock selection and want to reduce risk.