Investors Flock to Defensive ETFs as Korean Market Volatility Surges (Yonhap)
SEOUL, Dec. 4 (Korea Bizwire) — South Korea’s stock market has endured a stretch of whiplash in recent weeks, but low-volatility and high-dividend investment products have emerged as rare winners amid the turbulence.
According to data released Wednesday by the Korea Exchange, the TIGER Low Volatility ETF rose 7.1 percent from Nov. 3 to Dec. 3, climbing from 16,950 won to 18,150 won. The HK S&P Korea Low Volatility ETF gained 6.1 percent over the same period. Their performance stands in stark contrast to the broader Kospi, which fell 4.4 percent.
Low-volatility ETFs — commonly known as low-vol funds — primarily hold stocks considered more stable and less sensitive to market swings. TIGER’s fund is composed of companies such as GS Retail, KT&G, Samsung C&T and NH Investment & Securities, while HK’s version includes REITs like Shinhan Alpha REIT and SK REIT alongside Industrial Bank of Korea.
High-dividend stocks also shined during the market’s roller-coaster stretch. The Kospi High Dividend 50 Index rose 6.2 percent over the past month, while the KRX-Akros High Dividend 20 Index gained 5.1 percent.
Analysts say the shift reflects investors’ growing preference for defensive positioning as the market undergoes a short-term correction.
“The global equity market entered a broad period of adjustment last month, and Korean stocks in particular are unwinding their recent overheating,” said Cho Chang-min, an analyst at Hyundai Motor Securities. “This has strengthened demand for defensive sectors such as low-volatility and dividend strategies.”
Cho recommended focusing on companies with solid fundamentals and strong dividend profiles, naming semiconductors, autos, shipbuilding, trading firms, capital goods and banks as top picks for December.
Shinhan Investment & Securities analyst Shin Seung-woong noted that concerns about an “AI bubble” have pushed investors toward high-dividend and low-volatility stocks. “With no major catalysts in sight, this flow is likely to continue for the time being,” he said.
Daishin Securities, in its 2026 industry outlook released earlier this week, also predicted renewed investor interest in high-dividend stocks, citing upcoming legal reforms and changes to dividend taxation. It forecast that next year’s leading sectors will include semiconductors, defense, holding companies, pharmaceuticals, cosmetics and brokerage firms.
Ashley Song (ashley@koreabizwire.com)
