[비즈한국] The KOSDAQ market has long been a stage for individual investors. Individuals account for a significant portion of trading volume, and market sentiment is heavily swayed by the psychology of retail investors.
The problem is that selecting stocks in this environment is extremely difficult. While the KOSDAQ is a market with many innovative companies, it is also a market with significant information asymmetry and high volatility. In a structure where growth narratives are often priced in before actual earnings and thematic bubbles repeatedly form, it is not easy for individual investors to pick stocks and generate stable, long-term returns. Due to these structural characteristics, the asset management industry is increasingly expecting that 'KOSDAQ Active ETFs' could serve as a new investment vehicle for individual investors.
ETFs have traditionally been passive products that track a specific index. In the KOSDAQ market as well, there are ETFs that track indices like the KOSDAQ 150.
However, this passive approach often reveals its limitations in the KOSDAQ market. This is because the index composition itself is overly concentrated in certain sectors or large stocks. During periods when specific sectors like biotech or secondary batteries dominate the market, index ETFs effectively become heavily dependent on the performance of a few stocks. This is why critics point out that it is difficult to adequately include various growth companies in the KOSDAQ market solely through ETFs that follow an index.
Active ETFs emerged to address these limitations. Instead of simply following an index, fund managers select individual stocks to construct a portfolio. They can adjust stock weightings or include new companies depending on market conditions. In markets like the KOSDAQ, where there are many companies but information is limited, the ability to uncover stocks is crucial; active ETFs are significant in that asset managers perform this role on behalf of investors. While it is difficult for individual investors to analyze dozens of small and mid-cap companies themselves, the structure allows professional management teams to select companies and invest on their behalf.
The presence of active products in the domestic ETF market has also been growing rapidly. When first introduced, active ETFs did not account for a large share of the overall market, but they are now firmly established as a major investment vehicle alongside strategy-based ETFs.
Active ETFs are also a rapidly growing segment in the U.S. market. For asset managers, active ETFs offer a way to differentiate themselves by reflecting specific management strategies, rather than relying on simple index-tracking products.
The need for such active ETFs is even more pronounced in the KOSDAQ market. The KOSDAQ has a large number of listed companies, and the industrial structure changes rapidly. New growth industries such as Artificial Intelligence (AI), robotics, semiconductor equipment, and biotechnology are constantly emerging. Conversely, index compositions change relatively slowly, making it difficult to immediately reflect these new market trends. In this sense, active ETFs can be utilized as a KOSDAQ investment strategy because they can select companies with high growth potential in response to these changes.
Of course, they do not only have advantages as expected. The performance of an active ETF ultimately depends on the competence of the asset manager. Depending on which stocks are selected, they may generate returns higher than the index, but conversely, there is also the possibility of underperforming.
Furthermore, since many stocks in the KOSDAQ market lack sufficient liquidity, some point out that trading costs may increase as the ETF actively rotates its holdings. While ETFs are fundamentally liquid products that can be traded freely, investors must also consider that if trading volume is insufficient, the bid-ask spread can widen.
Nevertheless, the reason KOSDAQ active ETFs are receiving attention is because they align with a shift in investment methodology. Individual investors have been accustomed to picking specific stocks and investing heavily in them. However, as the market has become more complex and the pace of industrial change has accelerated, the difficulty of stock selection has increased. In this environment, diversified investment in a basket of companies is emerging as an alternative to individual stock picking. ETFs are the simplest means to implement this trend.
In the KOSDAQ market in particular, stock selection often dictates investment outcomes. This is because there are significant differences in competitiveness between companies even within the same sector, and earnings volatility is high. Active ETFs can employ strategies that select companies with high growth potential while accounting for these characteristics. The ability to indirectly invest in small and mid-cap growth companies that are difficult for individual investors to access directly is also considered a key advantage.
The asset management industry also views the KOSDAQ as a new market for ETF strategies. Until now, the core of the ETF market has been KOSPI large-caps or U.S. tech indices, but if demand for ETFs increases in the KOSDAQ market, where retail investor participation is high, it is highly likely that a new era of product competition will begin. KOSDAQ active ETFs may turn out to be not just another investment product, but an experiment that changes the investment structure of the KOSDAQ market itself.