Foreigners bet on leverage, retail investors on inverse ETFs — who won in September?

Foreign investors have been betting on a Kospi rally this month while retail investors have wagered on a decline, data show. The divergence played out through ETFs: foreigners piled into leveraged products while retail investors loaded up on inverse ones.

According to the Korea Exchange and Koscom CHECK, the most heavily purchased domestically listed ETF by foreign investors from Sept. 1 to Sept. 23 was KODEX Leverage, with net purchases of 214.4 billion won ($158 million). The product tracks twice the daily return of the KOSPI 200 index.

KODEX SK hynix Single-Stock Leverage (157 billion won) and TIGER SK hynix Single-Stock Leverage (110.4 billion won) ranked second and third.

Trading in single-stock leveraged ETFs had contracted sharply after financial regulators tightened rules effective July 31, raising the minimum deposit requirement from 10 million won to 30 million won. Foreign buying has surged recently, however, as large-cap semiconductor stocks climbed.

Retail investors, by contrast, gravitated toward inverse products that profit when share prices fall. Setting aside ETFs tracking major US indexes, the most net-purchased domestically listed ETF among retail investors was KODEX 200 Futures Inverse 2X, with net purchases of 121.7 billion won. The product — known in Korean markets as a "gop-beo-seu," or double-inverse ETF — tracks minus twice the daily return of the KOSPI 200. Over the same period, retail and foreign investors were effectively buying opposite sides of the same trade.

Retail investors also net-bought 100.5 billion won worth of KODEX Inverse. Meanwhile, KODEX Leverage and KODEX SK hynix Single-Stock Leverage — the top two foreign net-purchase picks — saw retail net selling of 317.5 billion won and 222.5 billion won, respectively, making them the second- and third-most net-sold ETFs after KODEX 200 (410.2 billion won in net selling).

Measured by returns this month, foreign investors came out ahead.

From Sept. 1 through Sept. 23, KODEX Leverage gained 9.24 percent while KODEX 200 Futures Inverse 2X fell 12.99 percent. The underlying KOSPI 200 rose 5.06 percent over the same period.

Experts advise investors to avoid one-directional bets in a market that remains highly volatile, recommending strategies that balance potential gains with stability.