The total net assets of exchange-traded funds (ETFs) listed in Korea have reached the 500 trillion won milestone, finally surpassing the market capitalization of the KOSDAQ market.

This historic golden cross occurred as the steady growth of ETFs coincided with a downturn in the KOSDAQ market this year.

According to the Korea Exchange and other sources on Sunday, June 28, the total net assets of domestic ETFs were recorded at 519.7474 trillion won as of June 25, exceeding the total market capitalization of the KOSDAQ market, which stood at 499.3039 trillion won.

While the exact figure for ETF net assets on June 26 has not yet been finalized, the market capitalization reached 502.4556 trillion won.

This figure is more than 20 trillion won higher than the KOSDAQ market capitalization of 478.7742 trillion won on the same day.

Given that ETF net assets are roughly equivalent to market capitalization, it is estimated that the ETF market continued to lead the KOSDAQ market on June 26.

This marks the first time domestic ETF net assets have surpassed the KOSDAQ since ETFs were first introduced to the KOSPI market in October 2002, with the initial cross occurring on June 23.

The KOSDAQ saw a sharp decline on June 23, with its market capitalization dropping significantly from 543.8033 trillion won the previous day (June 22) to 500.9414 trillion won.

On the other hand, while ETF net assets also shrank during the same period from 532.9747 trillion won to 501.3869 trillion won, they managed to stay above the 500 trillion won mark, overtaking the KOSDAQ.

Although the KOSDAQ market appeared to regain the lead on June 24 with 511.2441 trillion won, the ETF net assets reversed the trend again starting June 25.

The primary reason for ETF net assets surpassing the KOSDAQ is the rapid growth of ETFs as a popular investment vehicle for the public this year.

ETF net assets, which were below 300 trillion won at the end of last year (297.2703 trillion won), surpassed 300 trillion won in January, exceeded 400 trillion won in April, and reached the 500 trillion won era in May.

With the introduction of various ETF products, the number of products reached 1,142 as of June 26, narrowing the gap with the 1,822 stocks listed on the KOSDAQ.

Approximately 100 ETFs have been listed this year alone.

The timing of the ETF market's overtaking was accelerated by the sluggish performance of the KOSDAQ market.

The KOSDAQ market capitalization has been on a downward trend since hitting an all-time high of 679.5452 trillion won on April 27.

On that same day, the KOSDAQ market capitalization was more than 250 trillion won larger than the ETF net assets (427.4658 trillion won), but it fell below 600 trillion won for the first time on May 20, and eventually dropped below 500 trillion won on June 25 (499.3039 trillion won).

Consequently, the gap between ETF net assets and the KOSDAQ market is expected to widen further if this trend continues.

An industry official stated, "While the competition between the ETF market and the KOSDAQ, which was expected to be fierce, has lost some steam due to the sluggishness of the KOSDAQ market, the fact that ETFs have surpassed the KOSDAQ holds great significance in the history of ETFs."

The official added, "Although ETFs are currently traded on the KOSPI market, given the market size and the variety of products, it would not be surprising if they were traded as an independent, separate market in the future."