Now Even ETFs Need 'Discernment'… Why 'Alpha' That Beats the Market Has Become Important

Regarding how institutional investors view the market, expert Choi Chang-gyu explained that their investment perspective can be indirectly understood through the composition of ETFs created by asset management companies. This is because the types of ETFs launched by asset managers and their asset allocation methods reflect the institutions' strategic judgments. This approach provides important clues for investors to glimpse institutional market predictions.

Expert Choi Chang-gyu stated that during periods when share buybacks are ongoing, foreign investors tend to sell. He pointed out that it is common for foreigners to sell shares at that price, especially during share buyback periods for Samsung Electronics or SK Hynix. This suggests that share buybacks do not always lead to stock price increases, and different strategic judgments by foreign investors are at play.

Expert Choi Chang-gyu revealed that large-cap semiconductor stocks like Samsung Electronics, Samsung Electronics preferred shares, and SK Hynix are no longer simply being defined as cyclical stocks, but rather as having both growth momentum and value. From this perspective, asset managers are actively launching bond-mixed ETFs, spearheaded by SK Hynex and Samsung Electronics. These are designed to utilize the 30% safe asset allocation within IRP accounts, pursuing a new investment perspective on large-cap semiconductor stocks alongside stability.

Expert Choi Chang-gyu stated that although he joined a securities firm in 2001 and has been in the industry for 26 years, this current unprecedented trend of share buybacks and cancellations is new to him. As of August 2026, the cumulative volume of share buybacks has reached 77 trillion won, an extraordinary level incomparable to the past. This large-scale share buyback and cancellation is interpreted as an indicator of companies' very strong commitment to shareholder returns.

Bond-mixed ETFs control volatility and generate returns through a mechanical rebalancing mechanism. If stock prices rise, increasing the proportion of Samsung Electronics or SK Hynix, those stocks are mechanically sold to reduce their weight. Conversely, if bond prices remain flat or fall, decreasing the bond proportion, more bonds are purchased to increase their weight. This mechanical selling and buying process has the effect of selling assets that have risen and buying assets that have fallen, effectively responding to market volatility and designed to provide steady returns.

Regarding the phenomenon where foreign institutional investors focus on selling during share buyback periods, expert Choi Chang-gyu explained that it is related to share buyback regulations. This is because various rules, such as limits on bid price increases and daily purchase limits, are applied during share buybacks, limiting stock price increases. In such a situation, if foreign institutional investors engage in large-scale selling, a 'block deal' effect can occur, where the share buyback volume, intended for stock price defense, is used for a change of hands. This suggests that while share buybacks can be effective for defending stock prices, they can also be an opportunity for foreigners to make large-scale sales.

Expert Choi Chang-gyu emphasized that shareholder return policies should not be one-off, but rather become a corporate philosophy and virtue. He cited Apple's case, which bought back $710 billion worth of shares over 10 years, creating a virtuous cycle of reduced outstanding shares, improved EPS, and ROE. This demonstrates that continuous shareholder return policies are key to enhancing corporate value and investor trust.

Regarding why companies prefer share buybacks over dividends, expert Choi Chang-gyu pointed out the 'trap' of dividends. There is a market perception that once dividends are increased, it is difficult to reduce them, and if dividends are cut, investors interpret it as a sign of a corporate management crisis, leading to negative reactions. Like Apple's case, returning surplus cash to shareholders through share buybacks instead of dividends is perceived as a strategy to avoid the burden of dividend cuts and flexibly enhance shareholder value.

Despite Hyundai Motor's announcement of share buybacks and cancellations at its Investor Day, the stock price fell. Expert Choi Chang-gyu analyzed that investors' attention towards Hyundai Motor is focused more on the robot business, especially the commercialization and mass production plans for Atlas, rather than shareholder returns. This suggests that Hyundai Motor's stock momentum depends more on the visibility of its future new businesses than on short-term shareholder returns.

Expert Choi Chang-gyu emphasized that if Hyundai Motor's share buyback announcements continue next year, demonstrating consistency, investors will be able to build trust. He explained that simply a one-time announcement is not enough; a consistent shareholder return policy must be maintained for at least five years to be accepted as a corporate philosophy. Only with such consistency as a foundation can investors truly believe in the company's long-term efforts to enhance shareholder value.

Over the past three months, 46 new ETFs have been listed in the ETF market, with 11 of them being bond-mixed products. Expert Choi Chang-gyu explained that since June, ETF asset managers have shifted from merely tracking market returns (beta) to pursuing strategies that aim for returns exceeding the market (alpha) through stock selection. This change reflects investors' tendency to no longer be satisfied with overall market movements alone, but to actively explore the potential of individual stocks.

Expert Choi Chang-gyu defined bond-mixed ETFs as a 'hybrid strategy' combining offense and defense. It fundamentally involves holding about 50% of the portfolio in stocks while holding the remaining assets in bonds. This is a dual strategy that aims to prepare for market volatility while not missing out on stock investment opportunities. Therefore, bond-mixed ETFs are not entirely defensive products, but rather products that flexibly respond to market conditions and pursue both returns and stability simultaneously.

Regarding the proliferation of new ETFs, expert Choi Chang-gyu explained that asset managers launch various products to gain investors' selection. ETFs that do not receive investor choice naturally see their Assets Under Management (AUM) decrease, which leads to increased operating costs and ultimately delisting. Through this natural market mechanism, unnecessary ETFs are eliminated, and only competitive products survive.

Regarding ETF delisting regulations, expert Choi Chang-gyu explained that if the AUM (Assets Under Management) is less than 5 billion won or 10 billion won, it meets the delisting conditions. If this AUM condition is maintained for more than 3 months, the ETF will proceed with delisting. This standard serves as an important mechanism to protect investors and maintain market soundness by removing ETFs that have lost competitiveness in the market.

The replacement of stocks in passive ETFs is decided by the index provider who creates the underlying index, not by the asset manager. Expert Choi Chang-gyu explained that passive ETFs always have an underlying index, and if the index provider decides to change stocks or their weights, the asset manager follows suit. In other words, passive ETF asset managers cannot arbitrarily change stock weights; they manage assets according to the index methodology decided through discussion by the index committee. This is due to the inherent characteristic of passive ETFs, which are designed to precisely track a specific index.

A TDF (Target Date Fund) is a product that automatically adjusts the proportion of risky assets like stocks and safe assets like bonds to match an investor's retirement date. Expert Choi Chang-gyu explained that as we age, we naturally adjust our asset allocation, and this is called a 'glide path' in TDFs. For example, a '2065' TDF assumes an investor retires in 2065 and is managed by gradually reducing the proportion of risky assets and increasing the proportion of safe assets as that date approaches. This is a long-term investment solution that helps investors manage their assets stably even after retirement.