Korea Investment Trust CEO Urges Investors to Stop Buying Leveraged ETFs, Citing 47% Losses on July 20

According to Financial News, on July 20, Bae Jae-gyun, CEO of Korea Investment Trust Management, publicly urged investors to stop investing in single-stock leveraged and inverse 2x ETFs. In a Facebook post, he warned that even if underlying asset prices recover to original levels, ETF prices may not return proportionally due to volatility decay—a phenomenon he described as a negative compounding effect.

Bae provided data showing SK Hynix stock fell 17.9% from May 27 to July 16, but the corresponding single-stock leveraged product declined 47.5%, exceeding the theoretical loss of 35.8% by 11.7 percentage points. Similarly, the inverse ETF recorded a 31.1% loss despite theoretically delivering 35.8% gains under those conditions. Bae subsequently deleted the post.