Global ETF issuers chase Korea’s leverage-hungry investors

Global leveraged exchange-traded fund managers are stepping up their push into South Korea, drawn by retail investors whose appetite for high-risk US-listed products has made them a significant source of assets.

Russell Tencer, president of Tradr ETFs, visited Seoul on Thursday to meet Korean investors and promote the firm’s lineup. His trip marked the second visit by a foreign manager specializing in leveraged ETFs since Korea allowed single-stock leveraged funds to begin trading in late May.

Tradr, a brand of AXS Investments, manages about $500 million across roughly 60 leveraged ETFs. Its lineup includes recently launched single-stock products tied to SK hynix, SanDisk, SpaceX and Coupang.

AXS gained recognition among Korean investors after introducing TSLQ and NVDS in 2022. The funds, which offer leveraged inverse exposure to Tesla and Nvidia, remain popular among Korean traders.

Koreans account for about 10 percent of Tradr’s assets, a proportion Tencer described as “very meaningful.”

“We want to meet with our investor base,” he said at a press conference in Seoul. “We would love to meet and educate Korean investors.”

The visit reflects Korea’s outsized presence in leveraged ETF trading, particularly in the US market.

Direxion Daily Semiconductor Bull 3X Shares, better known by its ticker SOXL, remains the most heavily traded US-listed ETF among Korean investors this year. Their combined purchases and sales reached $72.64 billion, nearly six times the $12.6 billion traded in Tesla shares.

Recent won appreciation into the 1,300 won range against the dollar has prompted some investors to take profits on US holdings. Korean regulators have also tightened requirements for domestically listed single-stock leveraged ETFs, including minimum deposit and order-size rules.

The measures appear to have cooled local trading but have done little to eliminate demand for leveraged exposure overseas, encouraging foreign issuers to court Korean investors directly.

Tencer’s trip follows a visit last week by Tuttle Capital Management, an independent US ETF issuer. Tuttle oversees about $5 billion across 70 active ETFs, including its T-REX lineup of funds designed to deliver twice the daily gains or losses of individual stocks.

Korean investors account for about 25 percent of the assets in Tuttle’s ETFs, underscoring their importance to overseas issuers.

The demand is also shaping product development. Tradr is considering launching additional funds linked to Korean technology companies, Tencer said.

“We are considering launching products tied to South Korean technology,” he said.

A financial industry source said visits by leveraged ETF managers are becoming more frequent as issuers seek greater access to Korea’s active retail market.

Some Korean brokerages are connecting overseas managers with local investors and organizing promotional events, while other global firms are approaching the market independently, the source said.