Korea Investment CEO Warns Against Single-Stock Leveraged ETFs as SK Hynix Product Falls 47.5%

According to Chosun Biz, on July 16, Baek Jae-kyu, CEO of Korea Investment Trust Management and known as the "father of ETFs" in South Korea, issued a strong warning against single-stock leveraged and inverse ETF investments.

Baek posted an analysis on his Facebook page showing that SK Hynix's stock price fell 17.9% from May 27 to July 16, while the corresponding leveraged ETF product declined 47.5% during the same period. Theory predicted a leveraged product loss of approximately 35.8%, but actual losses reached 47.5%. An inverse 2x product betting on SK Hynix's decline was expected to gain 35.8% but instead suffered a 31.1% loss. Bae attributed these gaps to compounding effects from daily portfolio rebalancing in volatile single-stock environments.