Retail investors lose W6.3tr on single-stock leveraged ETFs in under 3 months

Retail investors in single-stock exchange-traded products lost more than 6.3 trillion won ($4.74 billion) in less than three months after the products launched, with 62 percent of those losses concentrated among investors in their 40s and 50s. Investors aged 70 and older averaged nearly 30 million won in losses per account.

People Power Party lawmaker Park Jun-tae of the National Assembly's Political Affairs Committee released data submitted by the Financial Supervisory Service showing that total retail investor losses from May 27 — when single-stock ETPs first went on sale — through Aug. 14 reached 6.31 trillion won. The figure was calculated based on data submitted by 10 comprehensive financial investment firms. Of that total, 2.32 trillion won represented realized trading losses, while 3.99 trillion won reflected unrealized valuation losses on holdings.

By age group, investors in their 40s recorded the largest losses at 2.05 trillion won, followed by those in their 50s at 1.87 trillion won. Combined, the two age groups accounted for 3.92 trillion won, or 62.1 percent of total losses. Investors in their 30s came next at 1.09 trillion won, followed by those in their 60s at 805.9 billion won and investors aged 70 and older at 293.4 billion won.

The per-account loss among older investors was also striking. Investors aged 70 and older recorded a combined 293.4 billion won in losses across 9,800 accounts, for an average loss of about 29.94 million won per account — roughly 2.6 times the overall average of about 11.56 million won per account. The figures are calculated across all trading accounts in each age group, not only those that recorded losses.

Realized trading losses grew rapidly over the period. From the end of July through Aug. 14, trading losses rose 360.4 billion won, or 18.4 percent, climbing from 1.96 trillion won to 2.32 trillion won in just two weeks. Unrealized valuation losses fell by 50.7 billion won over the same period, but the increase in trading losses more than offset that improvement, pushing total losses up by 309.7 billion won.

By brokerage, Kiwoom Securities clients recorded the largest losses at 1.29 trillion won, followed by Mirae Asset Securities at 1.26 trillion won, Samsung Securities at 999.4 billion won and NH Investment & Securities at 851.7 billion won. Kiwoom Securities and Mirae Asset Securities together accounted for 40.3 percent of total losses.

"Retail investor losses have exceeded 6 trillion won, and investors in their 40s and 50s have been hit particularly hard," Park said, adding that profit and loss figures for institutional and foreign investors should also be examined. He called for the FSS to release its data and for witnesses to be summoned to the national audit, and urged a parliamentary investigation and special prosecutor to get to the bottom of the matter.

Single-stock leveraged products are structured to deliver twice the daily price movement of individual stocks such as Samsung Electronics and SK hynix. When a stock moves in the opposite direction from what an investor anticipated, losses can mount quickly. Even in a market where prices fluctuate up and down, the compounding effect can erode cumulative returns over time, making these products poorly suited for long-term holding.