Retail Investors Tired of the Local Market Shift to U.S. Index and Covered Call ETFs

[Financial News] Retail investors worn down by volatility in the domestic stock market are turning to U.S. index funds and covered call exchange-traded funds (ETFs).
On the 25th, Koscom Corporation's ETF Check said that over the past week, from the 18th to the 21st, four U.S. index-tracking products and three covered call products made the top 10 list for net purchases by individual investors.
The product with the largest net buying was TIGER U.S. S&P 500, which saw 166 billion won in net inflows during the period. It was followed by KODEX U.S. S&P 500 ETF with 87.7 billion won, KODEX 200 Covered Call Active with 85.3 billion won, and KODEX U.S. Nasdaq-100 with 83.9 billion won.
TIGER US Nasdaq-100 ETF and Mirae Asset TIGER Dividend Premium Active ETF ranked sixth and seventh with 64.1 billion won and 59.2 billion won, respectively. TIGER US Nasdaq 100 Target Daily Covered Call also came in 10th with 33.4 billion won.
Although the domestic stock market has risen sharply since the second half of last year, it has also shown extreme volatility, including steep corrections in down markets. As a result, relatively stable products are drawing attention.
U.S. indices tend to move within a narrower range than domestic benchmarks while maintaining a steady upward trend, making them relatively stable. Beyond ETFs, individual funds are also moving overseas, as cumulative net purchases of foreign currency-denominated securities by retail investors continue to rise.
Kang Hye-seong, a researcher at Sangsangin Investment & Securities, said, "The broader trend of household funds moving into the stock market is still intact, but we are seeing a renewed shift from the domestic market back to overseas markets." She added, "Even though returns have not been strong for the top holdings favored by Korean individual investors investing in overseas stocks, retail investors who have experienced sharp rallies and crashes in the domestic market appear to be starting to feel fatigued." She noted that "this trend suggests retail sentiment has weakened significantly in the short term and is unlikely to recover anytime soon."
Covered call products are believed to have attracted strong inflows because they can help protect returns in volatile markets. A covered call strategy involves holding the underlying asset while selling call options to secure option premiums. In a bull market, gains may be capped because of the call sale, but in a sideways market, investors can expect additional income from the premium.
Park Seung-jin, a researcher at Hana Securities, said, "From an industry perspective, the view that AI has strong growth potential remains valid. But this is a time to look at the issue from multiple angles, including possible shifts in the competitive landscape, growing doubts shaped by users' push for cost efficiency, and a deteriorating funding environment." He advised that "when building an ETF portfolio, it is still necessary to adopt a strategy that takes volatility into account."

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