“The double bus is also futile”… Korean fire ants shot a triple US ETF 670 billion

Seohak ants are flocking to the US ‘3x leverage’ ETF, which is called’more casino-like stocks than casinos’.

According to the Securities Information Portal of the Korea Securities Depository on the 10th, after the beginning of the year TQQQ listed on the U.S. stock market, the purchase/sell settlement amount was $37953 million (about 4236 billion won). During the same period last year, the transaction amount of TQQQ increased more than five times from 82.8 billion won. In the domestic stock market, it is interpreted that while the investment fever for’Kubbus (ETF that follows twice the index decline)’ is seldom cooled, more aggressive investors are heading to the US stock market in search of ultra-high-risk products.

TQQQ is an ETF that follows three times the NASDAQ 100 index. A 1% increase in the NASDAQ 100 index is designed to yield 3% profit. If this index falls by 1%, the loss increases to -3%.

The trading volume of TQQQ is similar to the’TIGER leveraged ETF’ (459.7 billion won) among domestic leveraged ETFs that follow twice the KOSPI index, and much larger than the’KINDEX leveraged ETF’ (29.8 billion won).

The transaction volume of SQQQ also reached 226.63 million dollars (about 253 billion won). In contrast to TQQQ, SQQQ is a product that inversely tracks three times the NASDAQ 100 index. A 1% decline in the NASDAQ 100 yields 3% profit, and a 1% rise incurs 3% loss.

SQQQ is significantly outpacing transactions such as’TIGER Inverse ETF’ (82.8 billion won),’KINDEX Inverse ETF’ (15 billion won), and’ARIRANG 200 Futures Inverse 2X ETF’ (36 billion won).

There are no triple leverage ETF products in the domestic stock market. Among the most well-known leveraged ETFs,’KODEX Leverage’ and’KODEX 200 Futures Inverse 2X’ are both products that follow the index twice or -2 times.

However, there are also a number of 3-fold leveraged ETF products on the US stock market.

Among domestic investors, TQQQ and SQQQ are best known. In addition, FNGU, which follows three times the FANG+ (10 US innovative companies such as Tesla, Google, Twitter, Facebook, etc.), FNGD, which follows three times the index, and SOXL, S&P 500, which follow three times the Philadelphia Semiconductor Index. There are also 3x leveraged products such as SPXL which tracks 3 times and SPXS which tracks 3 times. KORU ETF, which moves three times the fluctuation of the KOSPI index, is also being traded on the US stock market.

However, as the fluctuation is large, the risk of investment loss is very high.

There are many views of concern that Seohak ants’ investment in 3-fold leveraged ETFs is increasing rapidly. Leveraged ETFs have high transaction costs (rollover costs) due to futures and options maturity. The rollover cost of a triple leveraged ETF is three times that of a typical ETF. The commission is also around 1%, which is the most expensive among ETFs. Unlike stocks where long-term investments can wait for a loss recovery, leveraged ETFs can lead to more losses when investing in long-term, and triple ETFs are more risky. In fact, assuming that a year ago, TQQQ and SQQQ were purchased at 50 million won each and a total of 100 million won, the total return is -1.04% instead of 0%, resulting in a loss of 1045,000 won. This is due to the high rollover cost and operation fee.

There are also places that prohibit postings on TQQQ and SQQQ on related Internet community bulletin boards. On one bulletin board, there is also an article saying, “I hope that ETFs such as TQQQ and SQQQ do not touch. It is difficult to bear the loss. It becomes an obstacle to daily life. Work life and salary come first.”

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