Two leveraged exchange-traded funds tracking SK Hynix Inc. will be wound down only months after launching in the US, as investor enthusiasm for the artificial intelligence trade fades.
The long and short offerings from Tradr ETFs provide traders with double the daily return or the inverse daily return, respectively, of the South Korean chipmaker's American depositary receipts. Both are set to be liquidated around Nov. 12, according to a statement from the ETF provider titled Tradr Announces Liquidation of Tradr 2X Long SK hynix Daily ETF and Tradr 2X Short SK hynix Daily ETF.
SK Hynix and competitor Samsung Electronics Co. experienced sharp price fluctuations this year as investors piled into and out of AI-related shares. Leveraged ETFs in Korea and other markets that amplify daily movements fueled the turbulence, though domestic regulators have recently taken steps to tighten oversight of such products.
SK Hynix's Seoul-listed shares have now fallen 56% from their record peak, with optimism about the AI boom giving way to worries over elevated borrowing costs needed to finance enormous infrastructure investments.
The Tradr ETFs launched on July 28, only weeks after SK Hynix listed its ADRs. A wave of other companies have rolled out similar products linked to SK Hynix, including ProShares, Leverage Shares and Direxion.
The Tradr 2X Long SK Hynix Daily ETF has declined more than 5% since it began trading, while the short fund has fallen 42%. The ADRs have risen about 5% over the same timeframe, outperforming the drop in the Korean shares.
Both funds have seen their assets contract more than 60% from peak levels, to a combined total of roughly $1.3 million at present.
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