Trader ETF CEO “Considering launching an underlying asset product for KOSPI listed stocks”

“I do not agree with the point that single-stock leveraged ETFs caused market volatility.”

(Seoul = Yonhap News) Reporter Kang Su-ji = Russell Tensor, CEO of Tradr ETFs, a U.S. leveraged exchange-traded fund (ETF) brand, said on the 17th, “We are considering launching a product that uses KOSPI-listed stocks as underlying assets.”

At a press conference held in Yeongdeungpo-gu, Seoul, the CEO of Tensor, who is visiting Korea, said, “I cannot mention specific products, but I am keeping an eye on technology industries based in Korea.”

Trader ETF is a leveraged/inverse ETF brand of U.S. management company AXS Investment, which first launched a single-stock leveraged ETF in the U.S. market in 2022. Currently, we are offering a variety of products that pursue leveraged performance using individual stocks and ETFs as underlying assets.

CEO Tensor's visit to Korea is due to the growth of Trader ETF's Korean investor base. Trader ETF's assets under management (AUM) are currently around $5 billion, of which 10%, or $500 million worth of products, are traded and held by Korean investors.

He pointed to the artificial intelligence (AI) investment cycle as the reason for the increased volatility of KOSPI and KOSDAQ this year. He said that the scale of investment in AI technology infrastructure and power is facing a historic moment, and valuations have risen to a higher level compared to past multiples due to large-scale capital inflow and high growth.

CEO Tensor said, “When the market is overheated and negative news such as geopolitical tensions or inflation comes out, panic occurs and re-pricing occurs with lower growth,” and added, “As macroeconomic tensions and record-high growth coincide, extreme volatility (in the Korean stock market) is appearing.”

As a criterion for selecting basic assets, 'market demand', not the company's growth, was chosen as the top priority. He explained, “The most important thing is market demand, and the indicators to judge this are dollar trading volume and volatility,” adding, “If volatility is not high, it means there is not much market interest.” SK Hynix [000660] 2x Long·Short (SKHA·SKHN) product and Coupang Leveraged ETF (CPNX) also emerged in the same context.

CEO Tensor did not agree with the point that single-stock leveraged ETFs increase volatility in the Korean stock market. He said, "The main means of securing leverage exposure are derivatives and margins, and whether in the U.S. or Korea, the proportion of leveraged ETFs is very small compared to the overall market size. Margins are risky and derivatives are complex, while leveraged ETFs are cost-effective and easy to use, so their growth is clear."

He selected SanDisk 2x Long (SNXX), New Tale 2x Long (SMU), and Numentum 2x Long (LITX) ETFs as popular trader ETF products in Korea.

Beneficiaries of the AI ​​ecosystem were pointed out as promising future themes. They said they are watching not only semiconductors, power, and connectivity, but also drones, self-driving cars, rare earth and mineral companies, and software companies that utilize this technology.