Retail Investors Pile Into Concentrated Chip ETFs as Semiconductor Rally Extends

Concentrated bets on Samsung Electronics, SK hynix, Samsung Electro-Mechanics and SK Square gain traction

Brokerages expect semiconductor shares to remain market leaders in the second half

Retail investors in South Korea are pouring money into exchange-traded funds tied to semiconductor stocks. As brokerages project chipmakers will lead any run in the Kospi toward 10,000, ETFs that concentrate on a small group of core names are drawing outsized demand.

Data from Koscom's ETF Check as of June 26 show seven of the 10 ETFs with the largest net retail inflows over the past month were semiconductor products. The biggest draw was the SOL AI Semiconductor TOP2 Plus ETF, which took in net inflows of 3.5545 trillion won ($2.57 billion) during the period.

It was followed by the KODEX SK hynix Single Stock Leverage ETF with 2.7512 trillion won ($1.99 billion) in net inflows, ranking second; the KODEX Samsung Electronics Single Stock Leverage ETF with 1.9119 trillion won ($1.38 billion), ranking third; the TIGER SK hynix Single Stock Leverage ETF with 1.8855 trillion won ($1.36 billion), ranking fourth; the RISE Samsung Electronics SK hynix Bond Balanced 50 ETF with 1.2965 trillion won ($939 million), ranking sixth; the TIGER Samsung Electronics Single Stock Leverage ETF with 1.1006 trillion won ($797 million), ranking eighth; and the PLUS Global HBM Semiconductor ETF with 873.9 billion won ($633 million), ranking ninth.

Retail investors have been especially active in ETFs that make concentrated bets on a small number of semiconductor names, including sector heavyweights Samsung Electronics and SK hynix. The SOL AI Semiconductor TOP2 Plus ETF stands out. Its net assets exceeded 8 trillion won ($5.79 billion) a little more than three months after listing.

Its appeal has come from concentrated exposure to large-cap chip stocks and key value-chain companies. The fund currently allocates 27.38% to SK hynix and 17.08% to Samsung Electronics, giving the two stocks a combined weighting of more than 40%. SK Square, which offers indirect exposure to SK hynix, accounts for 18.95%, while Samsung Electro-Mechanics, a major beneficiary of expanding artificial-intelligence infrastructure, makes up 24.72%. Those four stocks account for 88.13% of the portfolio. The ETF returned 37.81% over the past month.

Two similarly structured products have also posted standout gains: the KODEX AI Semiconductor TOP2 Plus ETF, up 42.49%, and the HANARO Fn K-Semiconductor ETF, up 38.46%. In both funds, Samsung Electronics, SK hynix, SK Square and Samsung Electro-Mechanics make up most of the portfolio, with combined weightings of 93.4% and 90.42%, respectively.

Retail buying has also remained steady in the RISE Samsung Electronics SK hynix Bond Balanced 50 ETF, which allocates 25% each to Samsung Electronics and SK hynix and invests the rest in high-quality bonds including South Korean Treasury securities. The fund's net assets topped 4.5 trillion won ($3.26 billion) within four months of its February listing.

Single-stock leveraged ETFs aimed at capturing short-term volatility are also seeing heavy interest. Since 16 related products listed on May 27, they have traded an average of about 10 trillion won ($7.24 billion) a day over the past month. Retail investors accounted for more than 90% of total trading.

Ha Jae-seok, an analyst at NH Investment & Securities, said concentrated portfolios with heavy weightings in specific stocks have recently captured retail attention. Samsung Electronics and SK hynix are not trading at a valuation premium despite continued earnings growth, he said, adding that the tilt toward large-cap semiconductor-focused ETFs is likely to persist for now.

As forecasts mount for the Kospi to rise above 10,000 this year, semiconductor stocks are still expected to play the market's leading role. Analysts also say Micron Technology's better-than-expected earnings in the US have eased much of the skepticism surrounding the chip cycle.

Yang Il-woo, an analyst at Samsung Securities, said semiconductor prices are likely to keep rising in the second half. Current consensus estimates for third-quarter operating profit in the sector look achievable even if chip prices barely rise from end-second-quarter levels, he said.

Ko Jeong-sam, Hankyung.com reporter (jsk@hankyung.com)