[DigitalToday reporter Sangyeop Oh (오상엽)] Domestic equity exchange-traded funds (ETFs) have come to account for more than 50 percent of South Korea’s listed ETF market. That is seen as the result of funds flowing into domestic equity ETFs as the local market rally continues, with the KOSPI surpassing the 9,000 level for the first time.

Financial data firm FNGUIDE said that as of June 18 the total net assets of 1,140 domestic ETF listings stood at 527.1 trillion won. Net assets have risen more than 5 percent since May 27, when the market entered the 500 trillion won era.

Net assets of domestic equity ETFs stood at 263.5 trillion won, exceeding 50 percent of total ETF net assets. It is the first time the share of domestic equity ETFs has topped half since the domestic ETF market surpassed 100 trillion won.

As recently as December 2024, domestic equity ETFs had net assets of 40 trillion won and a share of 24.3 percent. At the time, foreign equity ETFs had net assets of 54 trillion won and a 32.7 percent share, larger than domestic equity ETFs.

The trend shifted as the KOSPI rally gained steam from the second half of last year. Net assets of domestic equity ETFs rose to 93 trillion won at the end of last year, and their share expanded to 31.4 percent. Early this year, net assets topped 100 trillion won, and the share as of end-January was 36.8 percent, surpassing foreign equity ETFs.

As the KOSPI continued to rise, the share of domestic equity ETFs climbed to 43.0 percent at end-February, crossing 40 percent. It broke above 50 percent about four months later.

By contrast, the shares of foreign equity ETFs and domestic bond ETFs declined. As of June 18, foreign equity ETFs had net assets of 141 trillion won, accounting for 26.7 percent of the total. The gap in net assets versus domestic equity ETFs widened to 122 trillion won.

By number of listings, domestic equity ETFs totaled 430, accounting for 37.7 percent of the 1,140. Foreign equity ETFs were at around 360 listings, not much different from domestic equity ETFs.

Even so, the widening gap in net asset share is interpreted as reflecting both rising valuations driven by the local market’s gains and simultaneous inflows of funds.

The industry is assessed as seeing domestic equity ETFs taking hold as a tool for investors’ financial management. If the KOSPI continues to rise, the trend of increasing net assets in domestic equity ETFs could also continue.