SK hynix headquarters in Icheon, Gyeonggi, on Aug. 24NEWS1
Two leveraged exchange-traded funds (ETFs) tied to SK hynix and listed in the United States are set to liquidate just over three months after their launch.
The underlying SK hynix American depositary receipt, or ADR, has risen since the funds began trading, but both the bullish and bearish products have posted losses.
U.S. asset manager Tradr ETFs plans to liquidate the Tradr 2X Long SK hynix Daily ETF (SKHA) and the Tradr 2X Short SK hynix Daily ETF (SKHN) around Nov. 12, Bloomberg reported on Monday.
The two products aim to deliver twice the daily return of SK hynix’s ADR in opposite directions. SKHA seeks twice the daily gain, while SKHN seeks twice the daily decline.
Trading began on July 28 after SK hynix listed its ADR on the Nasdaq on July 10.
SK hynix’s ADR has risen about 5 percent since the ETFs launched.
SKHA, however, has fallen more than 5 percent despite betting on a rise in the stock.
SKHN, which bets on a decline, has dropped whopping 42 percent.
Leveraged ETFs that track daily returns do not simply deliver twice the cumulative return of the underlying asset over longer periods.
Repeated swings in the share price can magnify losses as daily returns compound, which means both bullish and bearish leveraged products can post negative returns over time.
SK hynix executives ring the Nasdaq opening bell in New York as confetti falls to celebrate the chipmaker’s ADR trading launch, on July 10.NASDAQ
The funds have also shrunk sharply in size.
SKHA had net assets of $480,489 as of Friday, while SKHN had $777,823. Together, the two funds held about $1.26 million in assets — down more than 60 percent from their combined peak.
The asset manager plans to allow trading and the creation and redemption of shares through Nov. 5 before shutting down the funds.
Any remaining assets will be distributed to investors after liquidation.
Bloomberg pointed to weakening investor sentiment toward AI-related stocks as one factor behind the closures.
Concerns have grown over the cost of financing massive AI infrastructure investments and whether those investments can generate sufficient returns. Other semiconductor stocks have also seen greater volatility as those concerns have intensified.
SK hynix shares in Korea are down 56 percent from their high for the year, according to Bloomberg.
The chip giant’s U.S. ADR closed at $137.02 on Friday, about 31 percent below its record high of $198.63 on Sept. 9.
Other asset managers, including ProShares, Leverage Shares and Direxion, have also launched leveraged products tied to SK hynix since the company’s U.S. listing.
Only the two products managed by Tradr ETFs are subject to the upcoming liquidation.
SK hynix is scheduled to report third quarter earnings on Wednesday.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
