Low-volatility exchange-traded funds in the Korean stock market showed divergent performance during recent market turbulence. Return gaps reached up to 7 percentage points over a one-week period. According to KOSCOM ETF CHECK data reported on the 15th, PLUS High Dividend Low Volatility 50 recorded -2.44% over the recent one-week period, while KODEX Minimum Volatility posted -9.29%. The performance differences stemmed from varying semiconductor stock exposure and distinct index calculation methodologies. Top performers held higher weightings in defensive sectors such as telecommunications, finance, and consumer staples, while underperformers maintained approximately 20% combined exposure to Samsung Electronics and SK Hynix that suffered from the recent semiconductor sector decline.
Low-Volatility ETFs Reduced Losses Compared to Benchmark Indices
PLUS High Dividend Low Volatility 50 recorded a -2.44% return over the recent one-week period, marking the best performance among domestic low-volatility ETFs. TIGER Low Vol followed with -2.56%, HK S&P Korea Low Vol posted -3.22%, and Power High Dividend Low Volatility recorded -3.35%. These results represented approximately 8 percentage point reduced losses compared to benchmark index ETFs KODEX 200 (-11.31%) and TIGER 200 (-11.37%) during the same period.
Low volatility investment strategies, including the "Low Vol" approach, construct portfolios centered on stocks with minimal price fluctuations. The strategy aims to build stable portfolios with reduced investment risk, though returns may be somewhat limited during bull markets led by momentum stocks. The approach serves as a defensive strategy to relatively reduce losses during roller-coaster market conditions while providing diversification benefits through fund investment.
Performance Gap Reached 7 Percentage Points Among Low-Volatility Products
KODEX Minimum Volatility (-9.29%) and KODEX 200 Value Low Volatility (-7.69%) recorded relatively weaker performance within the low-volatility category. The one-week return gap between the best and worst performers in the same category reached approximately 7 percentage points. Over a one-month period, these two products posted returns of -16.92% and -13.71% respectively, with losses up to 7 times larger than TIGER Low Vol's -2.42% during the same timeframe.
Top-performing products including Low Vol maintained high weightings in defensive stocks centered on telecommunications, finance, and consumer staples sectors. In contrast, KODEX Minimum Volatility and KODEX 200 Value Low Volatility held individual or combined weightings of approximately 20% in Samsung Electronics and SK Hynix, resulting in relatively high semiconductor and information technology large-cap exposure that absorbed the full impact of the recent semiconductor sector decline despite their low-volatility classification.
Semiconductor Exposure and Index Methodology Created Performance Differences
The performance differences originated from index calculation methodologies. HK S&P Korea Low Vol tracks the S&P Korea Low Volatility index, which selects approximately 50 stocks with the lowest volatility over the recent 252 trading days and determines weightings using an inverse volatility method. KODEX products track Korea Exchange (KRX) strategic indices that consider market deviation, sector and factor exposure, and corporate intrinsic value together. Market-representative semiconductor large-cap weightings remained sustained, and defensive capabilities weakened significantly during the recent market decline.
An asset management company official stated that low-volatility ETFs do not all operate in the same manner, with characteristics varying according to tracked indices and calculation formulas. The official noted that return gaps among products of the same type can widen further during periods when specific sector volatility dominates the market.
FAQ
What return did PLUS High Dividend Low Volatility 50 record over the recent one-week period?
PLUS High Dividend Low Volatility 50 recorded a -2.44% return over the recent one-week period as reported on the 15th, marking the best performance among domestic low-volatility ETFs according to KOSCOM ETF CHECK data.
Why did KODEX Minimum Volatility underperform other low-volatility ETFs?
KODEX Minimum Volatility posted -9.29% over the recent one-week period due to approximately 20% combined exposure to Samsung Electronics and SK Hynix, absorbing the full impact of the recent semiconductor sector decline despite its low-volatility classification.
How do index methodologies differ between HK S&P Korea Low Vol and KODEX products?
HK S&P Korea Low Vol tracks an index selecting approximately 50 stocks with lowest volatility over 252 trading days using inverse volatility weighting, while KODEX products track KRX strategic indices considering market deviation, sector exposure, and intrinsic value together.
