"Sorry to Say This, But Avoid Leverage Investments": An Unusual Message from an Asset Management CEO

Bae Jae-kyu, CEO of Korea Investment Management, stated on July 20 that investors should "stop investing now" regarding single-stock leverage products, which have been identified as a factor contributing to increased volatility in the domestic stock market.

According to the financial investment industry, CEO Bae posted an article titled "Analysis of Performance of Single-Stock Leverage and Inverse 2x ETFs" on his Facebook page earlier today.

In the post, Bae began by saying, "As the CEO of an asset management firm that operates single-stock leverage ETFs, I am sorry to say this," and added, "The conclusion is that you should not invest in single-stock leverage and inverse 2x ETFs."

He explained the reason by stating, "Even if time passes and the underlying stock returns to its original price, it is highly likely that the ETF price will not return to its original level."

Bae added, "Especially when the volatility of the underlying stock is as high as it is now, it is a structure where losses increase every day," and noted, "This is because no one expected volatility to become this high."

It is considered unusual for the CEO of an asset management firm that launches and operates single-stock leverage products to publicly express a negative opinion about investing in those very products.

Korea Investment Management currently operates the "ACE Samsung Electronics Single-Stock Leverage" and "ACE SK Hynix Single-Stock Leverage" ETFs.

However, CEO Bae has since taken down the post.
 

(Photo: Provided by Korea Investment Management, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.