Korea's 'Father of ETFs' Wants Single-Stock Leveraged Funds to Die a Natural Death

Should leveraged single-stock products tied to Samsung Electronics and SK Hynix be forcibly delisted? No — but they should be allowed to fade away. That was the argument made on July 30 by Bae Jae-kyu, chief executive of Korea Investment Management and a figure often described as the father of the domestic exchange-traded fund industry, who said such products should be steered toward a “natural death” rather than pulled from the market by decree. In his telling, the wind-down is achievable with cooperation from asset managers and only modest help on the regulatory side.

A Warning From the Industry’s Own Architect

The comments carry unusual weight because of who is making them. Bae leads one of Korea’s major asset managers and is credited with helping build the country’s ETF market into what it is today — which makes his campaign against one of its fastest-growing product categories a case of the industry’s architect turning on its most speculative offspring. He has not been subtle about it: before the July 30 remarks, he had already urged retail investors to stop putting money into single-stock leveraged ETFs altogether.

His target is narrow but significant. Leveraged products built on a single underlying stock amplify daily moves in that one name, and in Korea the names in question are the two most systemically visible companies in the market. Samsung Electronics sits at the center of a group whose brand was ranked fifth worldwide in 2024, and SK Hynix — a company that generated 66.19 trillion won in revenue in fiscal 2024 and employs roughly 46,900 people — has become the emblem of the AI memory boom. When retail investors want concentrated, magnified exposure to Korean tech, these are the tickers they reach for.

Why ‘Natural Death’ Beats the Guillotine

The distinction Bae draws — natural death versus delisting — is more than rhetorical. Forced delisting is a blunt instrument: it crystallizes losses for existing holders on a fixed timetable, invites legal and political backlash, and hands regulators the blame for outcomes investors chose themselves. A managed decline works differently. If asset managers stop promoting the products, decline to launch successors, and let existing funds shrink as money rotates out, the category can wither without any single dramatic intervention. Bae’s point is that this path requires little more than the managers’ willingness and some accommodating adjustments to the rules — “a little institutional help,” as he framed it.

That framing also quietly shifts responsibility. Rather than waiting for the financial authorities to act, Bae is arguing that the firms that created and profit from these products can effectively retire them on their own.

The Harder Question: Will Anyone Follow?

The obvious obstacle is commercial. Single-stock leveraged funds exist because they sell, and an asset manager that unilaterally exits the category cedes fee revenue to competitors who stay. That collective-action problem is precisely why Bae’s call includes a role for regulators: without at least a light institutional nudge, the “natural death” depends on every major manager choosing restraint at the same time.

For investors in Samsung and SK Hynix leveraged products, the practical takeaway is less about any imminent rule change than about the direction of travel. When the executive who helped create Korea’s ETF market publicly asks investors to walk away from a product class — and sketches a mechanism for making it disappear — it signals that the industry’s own leadership now views the risk profile as indefensible. Whether that judgment hardens into policy will depend on how regulators and rival asset managers respond in the months ahead.