Bae Jae-gyu, CEO of Korea Investment Management [Korea Investment Management]
Bae Jae-gyu, CEO of Korea Investment Management [Korea Investment Management]

Bae Jae-gyu, CEO of Korea Investment Management and widely regarded as the father of domestic ETFs, said Thursday that single-stock leveraged products should be "left to die a natural death."

Bae is credited with introducing ETFs to South Korea in the early 2000s and playing a leading role in developing the market, earning him the "father of ETFs" label in some industry circles. He previously served as head of ETF management and executive vice president of asset management at Samsung Asset Management before taking the helm at Korea Investment Management in February 2022.

Bae made the remarks on his social media account Thursday, saying "not doing it at all is the best option." The post came 10 days after he had published and then taken down a July 20 message urging investors in single-stock leveraged products to "please stop investing, even now."

Bae said he had previously posted and then removed a piece about single-stock leveraged and 2x inverse products, explaining that he had received "far more responses than expected."

He went on to say that he understands well how leveraged and 2x inverse products work, warning that "when volatility rises and prices repeatedly swing up and down, the value of these products can erode quickly due to daily rebalancing and the compounding effect."

Bae said many investors think, "It's fallen enough, so it should go up now," or "I'll just get in briefly and get out quickly." "But how many times have we actually been able to time that correctly?" he asked. He then said "it is hard to consistently build wealth that way," adding, "not doing it at all is the best option."

He also cautioned against concentrating investment in a single memory chip company, urging investors instead to consider the entire semiconductor ecosystem. He said "semiconductors are essential in the AI era and not easily replaceable," but added that investors "must remember that memory chips are still a cyclical industry."

With Samsung Electronics, SK Hynix and Micron all announcing large-scale investment plans, and Chinese firms such as CXMT and YMTC rising rapidly, he said that "even if a supply glut does not appear immediately, supply expansion is ultimately just a matter of time."

He said investors should therefore spread exposure across "chip design, memory, foundry and equipment," because "even if one part of the industry stumbles, you can still capture the growth of the ecosystem as a whole."


th5@heraldcorp.com