The sharp decline in shares of semiconductor giants Samsung Electronics and SK Hynix has impacted retirement pension accounts. Investors who increased their stakes in these companies through bond mixed ETFs, classified as safe assets, have recorded losses exceeding 20% in July, raising concerns about the classification of safe assets in retirement pensions.
According to the Korea Exchange on July 30, four bond mixed ETFs related to Samsung Electronics and SK Hynix, including 'KIWOOM Samsung Electronics & SK Hynix Bond Mixed 50' (-25.87%), '1Q K Semiconductor TOP2 Bond Mixed 50' (-25.44%), 'RISE Samsung Electronics SK Hynix Bond Mixed 50' (-25.00%), and 'KODEX Samsung Electronics SK Hynix Bond Mixed 50' (-24.86%), all fell by more than 20%. The decline in these ETFs is attributed to the respective drops in the stock prices of Samsung Electronics and SK Hynix, which fell by 38.22% and 50.11% this month.
The situation was markedly different just a quarter ago. Investors flocked to bond mixed ETFs as a way to capitalize on the semiconductor boom, leading to a rapid influx of funds. The largest bond mixed ETF, 'RISE Samsung Electronics SK Hynix Bond Mixed 50,' recorded returns of 12.7% and 22.2% in April and May, respectively. Its total assets under management (AUM), which stood at approximately 32.1 billion won at its February launch, surged to over 1 trillion won by the end of April, reaching 3.465 trillion won by the end of May and 4.5574 trillion won by the end of June.
The demand to maximize stock exposure while adhering to retirement pension regulations appears to have driven the popularity of these products. Retirement pensions limit the investment in risky assets like stocks to 70%. However, by utilizing bond mixed ETFs (which have less than 50% stock), investors can effectively increase their stock investment exposure within retirement accounts to as much as 85%.
However, with recent market declines leading to significant losses in retirement accounts, questions have arisen about the appropriateness of classifying bond mixed ETFs, which include a limited number of stocks, as safe assets. An industry insider noted, "With the recent launch of single-stock leveraged ETFs, the volatility of Samsung Electronics and SK Hynix has increased, which inevitably affects retirement pension returns. Just because half of the portfolio is in bonds does not guarantee safety." Concerns have also been raised that the concentration of investments in a few stocks contradicts the long-term savings and diversification goals of retirement pensions.
The Korea Financial Investment Association, which has been considering expanding the stock investment limit for retirement pensions, is monitoring the situation. Chairman Hwang Seong-yeop indicated during a press conference marking his 100th day in office in April that he would review whether the current 70% limit on risky asset investments restricts the choices available to participants.
A representative from the association stated, "The pension market is showing signs of overheating around ETFs faster than expected, and we are continuously gathering opinions from our member firms to ensure market stability and investor protection."
* This article has been translated by AI.
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