Prices rise on net purchase days 47.5% of the time; semiconductor and value-up ETFs show strongest correlation
Retail investors have sharply increased their influence on the exchange-traded fund market over the past six years, with ETF prices rising on days when individual investors are net buyers at a rate now nearly matching that of foreign investors, a new report shows.
According to a KB Securities report titled "Which ETFs Actually Respond to Retail Buying?" released Wednesday, the rate at which retail net purchases and ETF returns moved in the same direction — the so-called co-movement ratio — stood at 47.5% this year.
The finding is based on an analysis of 615 domestically listed ETFs tracking Korean assets, examining whether the direction of retail net purchases aligned with ETF returns over the past six years.
The co-movement ratio has risen consistently, climbing from 38.0% in 2021 to 39.6% in 2022, 41.7% in 2023, 41.9% in 2024 and 45.1% in 2025, before reaching 47.5% this year.
The gap with foreign investors, who once dominated the ETF market, has also narrowed sharply. In 2021, the difference in co-movement ratios between retail and foreign investors was 13.6 percentage points — 38.0% for retail versus 51.6% for foreigners. This year, the figures stand at 47.5% and 47.7%, respectively, in effect erasing the gap.
"As the volume of retail money flows has grown, so has its impact on the stock market," said Park Yu-an, a researcher at KB Securities. "Improved access to information has also made retail investors' trading patterns more similar to those of foreign investors."
Retail influence was more pronounced in small- and mid-sized ETFs — those with net assets between 100 billion won and 1 trillion won (about $659 million) — than in large ones. The co-movement ratio for ETFs with net assets of 100 billion to 500 billion won was 47.9% this year, and 47.7% for those in the 500 billion to 1 trillion won range. For ETFs with net assets exceeding 1 trillion won, the ratio was limited to 40.2%.
The retail buying effect was especially strong in certain thematic ETFs. The TIME Korea Value-Up Active ETF posted a co-movement ratio of 65.7%, the SOL Semiconductor Front-End Process ETF recorded 61.8%, and the ACE Life Asset Shareholder Value Active ETF came in at 59.4% — meaning prices rose on well over half the days when retail investors were net buyers.
Returns on those days were also solid. For the SOL Semiconductor Front-End Process ETF, the average return on retail net purchase days was 1.25% for the period spanning last year through this year, and 3.20% for this year alone.
Leveraged ETFs told the opposite story. The co-movement ratio for the KODEX Leverage ETF was limited to 12.5%, the KODEX Kosdaq150 Leverage ETF to 13.8%, and the TIGER Leverage ETF to 17.2% — meaning prices actually fell more often than not on days when retail investors bought in.
That stands in contrast to foreign investors, whose co-movement ratio for the KODEX Leverage ETF reached 55.8%. Park said the retail flows into leveraged ETFs appear to reflect bargain-hunting rather than momentum-chasing. "It seems retail buying tends to come in early in a price decline," he said, "which is why the co-movement ratio ends up being low."
moon@heraldcorp.com
