Korea’s exchange-traded fund market has been led by semiconductor leveraged products, posting outsized gains as expectations for an industry upturn persisted. Because these funds are designed to track twice the daily move of their underlying indexes, a sustained rise amplified returns through compounding.
According to the Korea Exchange on May 3, semiconductor leveraged ETFs dominated the top of the one-year performance rankings for the period from April 30, 2025, to April 30, 2026. The best performer was TIGER 200IT Leverage, which mainly holds Samsung Electronics, SK hynix and SK Square. It rose from 20,865 won to 328,880 won, a gain of 1,476.23%. By simple calculation, a 100 million won investment would have grown to about 1.5 billion won. Its one-month return was also about 130%.
TIGER Semiconductor TOP10 Leverage climbed from 4,225 won to 59,450 won over the same period, up 1,307.10%. KODEX Semiconductor Leverage jumped from 7,600 won to 100,485 won, returning 1,222.17%. All three rose more than tenfold, underscoring the explosive payoff structure typical of leveraged ETFs.
The gains reflect a broader uptrend in semiconductor shares. As global big tech companies expanded AI investment and demand for data center buildouts continued, expectations for semiconductor earnings were revised higher. Related indexes rose steadily, and returns for leveraged ETFs tied to them expanded sharply.
The more-than-tenfold surge also highlights a structural feature of leveraged ETFs: compounding. These products aim to deliver twice the underlying index’s daily return. When markets rise for an extended period, the result can exceed a simple doubling because gains build on prior gains.
The same structure can magnify losses. In choppy markets where prices swing up and down, a “negative compounding” effect can erode value quickly. If an index repeatedly fluctuates within a range, a leveraged ETF can face a structural tendency for principal to decline over time.
Investor caution is also being urged as single-stock leveraged ETFs tied to Samsung Electronics and SK hynix are expected to be launched. Because they reflect the volatility of individual shares, the potential for gains can increase, but so can the risk of losses.
Brokerages have raised target prices on the back of positive results at Samsung Electronics and SK hynix, while also flagging risks. Hana Securities raised its target price for Samsung Electronics to 330,000 won, but said, “Uncertainty around operating profit estimates has increased due to a strike issue related to bonuses, and the stock’s recent movement has been relatively weak.”
A report also recently downgraded SK hynix. BNK Investment & Securities researcher Lee Min-hee lowered the rating to hold, saying, “Despite the steep increase in earnings, it has entered the late stage of the cycle, and considering a slowdown in momentum in the second half, it is now expected to shift into a low price-to-earnings (PER) stock.”
* This article has been translated by AI.
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