Top 5 AI Investment Products Most Sought by Koreans in 2024

In 2024, interest in AI (artificial intelligence) related investment products among Korean investors has reached an all-time high. According to the latest statistics from the Financial Supervisory Service, the net purchase amount of AI-related funds in the first half of this year recorded approximately 8.7 trillion won, a 234% increase compared to the same period last year. This is the result of several factors, including the spread of ChatGPT, the growth of AI chip companies like NVIDIA, and the expansion of AI investments by major domestic tech firms. In this article, we will analyze in detail the top 5 AI investment products that Korean investors are actually choosing the most.

1st Place: AI Themed Funds – Representative Products of Domestic Asset Management Firms

AI themed funds are currently the most preferred AI investment vehicle among Korean investors. As of the first half of 2024, there are over 150 AI-related funds being managed, with the net assets of the top 10 funds exceeding approximately 15 trillion won.

Analysis of Major AI Fund Products

  • Samsung Asset Management 'Samsung Global AI Fund' – Net assets of approximately 2.3 trillion won, average annual return of 22.3%
  • KB Asset Management 'KB AI Global Select Fund' – Net assets of approximately 1.85 trillion won, monthly dividends of 50,000 to 70,000 won (paid monthly)
  • Mirae Asset Management 'AI Factory Fund' – Net assets of approximately 1.2 trillion won, operates two versions: aggressive and stable

The strengths of AI themed funds are stock selection by professional fund managers and portfolio diversification. On average, investments can start from a minimum of 10,000 won per month, and fund fees are around 0.5% to 1.5% annually. In 2024, 62% of AI fund subscribers are office workers in their 20s to 40s, with an average monthly investment amount of about 1.5 million won.

💡 Investment Tip: Diversify your investments across multiple AI funds, but avoid products from the same fund company and choose products from different fund companies with varying management philosophies. A combination of at least three funds can help reduce risk.

2nd Place: AI Related ETFs – The Representative of Low-Cost Investment

Exchange-Traded Funds (ETFs) have lower fees and excellent liquidity, making them the fastest-growing AI investment product in 2024. According to the Korea Exchange, the net purchase amount of AI-related ETFs in the first half of the year was approximately 2.1 trillion won.

Major Domestic AI ETF Products

  • KODEX AI – Tracking index: Solactive Global AI Index, approximately 50 holdings, annual fee of 0.49%
  • TIGER AI Robot & Drone – Tracking index: 50 global companies related to AI robots and drones, annual fee of 0.65%
  • Samsung AI Global – Regular monthly dividend payments, annual fee of 0.75%
  • Korea AI Semiconductor Factory – Focused on domestic semiconductor and AI chip companies, annual fee of 0.59%

The biggest advantages of ETFs are transparency and low costs. While the daily price of funds is determined after market close, ETFs are traded in real-time, allowing for immediate capture of price fluctuations. The average annual return of AI ETFs in 2024 is 18.7%, which is nearly similar to that of AI themed funds (average 19.2%) during the same period.

Particularly, investments can be made with just a stock account, starting from about 5,000 to 10,000 won, lowering the entry barrier. Additionally, when dividends are paid, only a 15.4% tax on dividend income (including local income tax) is incurred, making it tax-efficient.

💡 Investment Tip: AI ETFs are optimized for long-term holding. By regularly investing about 5-10% of your salary through a 'dollar-cost averaging' strategy, you can significantly reduce volatility risk.

3rd Place: Direct Investment in AI Tech Companies – Trading Individual Stocks

Investing directly in individual stocks is also rapidly increasing among Korean investors. Notably, about 41% of investors in their 20s and 30s hold individual stocks of AI-related companies.

Most Popular AI Related Individual Stocks Among Koreans

  • NVIDIA – Market capitalization of approximately $3.4 trillion (about 4,550 trillion won), Korean investor ownership rate of 12.3%, dividend of about 640 won per share
  • Samsung Electronics – Stock price increased by about 34% in the first half of 2024 due to improved AI chip performance, dividend of about 1,850 won per share
  • SK Hynix – Achieved quarterly operating profit of about 2.1 trillion won due to increased sales of AI memory chips
  • NAVER – Advanced its own AI search 'CLOVA', increasing revenue from its advertising business
  • Kakao – Expanded its AI collaboration tool 'Kakao i', with corporate supply revenue of about 34 billion won (annual)
  • LG Electronics – Developed AI-based smart home technology, enhancing AI capabilities in TVs and home appliances

The advantage of investing in individual stocks is the potential for high returns. As of the first half of 2024, NVIDIA recorded a return of about 52%, and Samsung Electronics also rose by about 34%. However, due to high volatility, it is important to invest with thorough analysis and sufficient funds.

Trading commissions for individual stocks vary by brokerage, but most are around 0.015% to 0.025%. For example, if you invest 10 million won, the commission would be about 15,000 to 25,000 won.

💡 Investment Tip: When investing in individual stocks, focus more on 'fundamental analysis' than on 'technical analysis'. Carefully review the scale of a company's AI-related R&D investments, patent acquisition status, and quarterly earnings announcements before making investment decisions to increase your chances of success.

4th Place: AI Related Bond Funds – The Choice for Stability-Seeking Investors

Among investors concerned about stock market volatility, AI-related corporate bonds or junk bond funds (high-yield bond funds) are also popular. As of the first half of 2024, the net purchase amount of technology corporate bond funds was approximately 420 billion won.

Major AI Bond Investment Products

  • Samsung Asset Management 'AI Technology High Yield Fund' – Monthly dividends of about 3,000 to 5,000 won (per 1 million won), expected annual return of 4.8% to 5.5%
  • KB Asset Management 'Global AI Corporate Bond Fund' – Invests in AI corporate bonds with a credit rating of BBB or higher, monthly dividends
  • Mirae Asset 'AI Tech Quality Bond Fund' – Maturity income type, expected annual return of 4.2%

Bond funds are characterized by relatively stable returns. While the average volatility of stock funds is around 16% to 22%, bond funds are about 3% to 7%. Therefore, the risk of principal loss is low, and regular dividends can be received.

However, a downside is that the returns are lower compared to stock investments. Additionally, they are sensitive to interest rate fluctuations, so the value of the fund may decrease during periods of rising benchmark interest rates. As of now, the benchmark interest rate is maintained at 3.5%, so bond fund returns are likely to be formed around this level.

💡 Investment Tip: Combining stock funds and bond funds in a 7:3 or 6:4 ratio can secure both aggressiveness and stability. For example, if you invest 1 million won per month, allocating 700,000 won to an AI themed fund and 300,000 won to an AI bond fund would be effective.

5th Place: Overseas AI Investment Products – A Portfolio Centered on American Companies

Korean investors also utilize direct investments in American companies that possess the most advanced AI technologies. In particular, products linked to the U.S. Nasdaq index are popular.

Popular Overseas AI Investment Products

  • TIGER U.S. Nasdaq 100 – Includes top 100 tech companies like NVIDIA, Microsoft, and Tesla, annual fee of 0.35%
  • KODEX U.S. Nasdaq 100 Leverage – Provides about double the return of the basic index, annual fee of 0.65%, high risk and high return
  • Korea Investment 'Global AI Long-Term Growth Fund' – Focused on U.S. and European AI companies, annual fee of 0.99%
  • Direct Trading – Opening a U.S. Stock Account – Using Korean brokerage firms' overseas stock trading services, commission of about 0.02% to 0.05%

The U.S. Nasdaq 100 index rose approximately 28% in the first half of 2024 and recorded an increase of about 42% in 2023. This was largely driven by the surge in stock prices of AI-related companies like NVIDIA and Microsoft.

When investing overseas, it is important to be cautious of exchange rate fluctuations. When the U.S. dollar is strong, the returns on U.S. stocks increase, but if the dollar weakens, exchange losses may occur. For example, if the return on U.S. stocks is 10%, but the dollar weakens by 5% during the same period, the final return would drop to about 5%.

Additionally, capital gains tax applies when investing in foreign stocks. A tax of about 20% must be paid on profits exceeding 2.5 million won per year (according to National Tax Service regulations). Therefore, it is advisable to adjust the investment scale considering tax efficiency.

💡 Investment Tip: To reduce the risk of exchange rate fluctuations, consider selecting funds with a currency hedge feature. Currency hedge funds are less affected by exchange rate fluctuations, and while the fees are slightly higher (an additional 0.1% to 0.2% annually), they are a good choice for long-term investors.

Guide to Choosing AI Investment Products – Based on Your Investment Style

AI investment products are very diverse, so it is important to choose according to the investor's style and goals.

📊 Recommended Portfolios by Investment Style

  • Conservative Investor (Risk-Averse)
    • AI Bond Fund 70% + AI Themed Fund 30%
    • Expected Annual Return: 4.5% to 5.5%
    • Expected Volatility (Standard Deviation): About 5% or less
    • Recommended Monthly Investment Amount: 500,000 won or more
  • Balanced Investor (Seeking Balance)
    • AI Themed Fund 40% + AI ETF 40% + AI Bond Fund 20%
    • Expected Annual Return: 10% to 15%
    • Expected Volatility: About 8% to 12%
    • Recommended Monthly Investment Amount: 1 million won or more
  • Aggressive Investor (Seeking High Returns)
    • AI Related Individual Stocks 50% + AI ETF/Fund 40% + Overseas AI Products 10%
    • Expected Annual Return: 18% to 35%
    • Expected Volatility: About 18% to 25%
    • Recommended Monthly Investment Amount: 2 million won or more, sufficient spare funds are essential

Outlook and Precautions for AI Investment in the Second Half of 2024

According to the recent interest rate outlook from the Bank of Korea, there is a high possibility of a benchmark interest rate increase in the second half of 2024. This could affect AI stocks. Historically, during periods of rising interest rates, the stock prices of high-growth stocks (AI companies) tend to decline.

However, the long-term growth potential of the AI industry is still considered high. The International Monetary Fund (IMF) predicts that the productivity improvement effect on the global economy due to AI will reach an annual rate of 4.4% over the next decade. Korea is no exception, as the government has announced an 'AI National Strategy' and plans to invest about 35 trillion won in the AI industry by 2032.

However, there are some precautions to take when investing:

  • Adjusting Excessive Expectations – Expecting the high returns of AI funds in the first half of 2024 (average 19.2%) to continue is risky
  • Regulatory Risks – Global regulatory tightening related to AI (EU AI Act, etc.) may negatively impact corporate performance
  • Intensifying Technological Competition – Potential weakening of NVIDIA's GPU monopoly (advancements by AMD, Intel)
  • The Importance of Diversification – Avoid concentrating more than 30% of your assets in specific companies or products
💡 Investment Tip: Clearly define your investment goals. Having specific goals like "achieving 1.5 times the principal within 3 years" or "securing retirement funds in 30 years" allows you to remain steady during short-term volatility and even take advantage of buying opportunities at lower prices.

Conclusion

To summarize the AI investment products most sought by Koreans in 2024:

1st Place AI Themed Funds are the most popular products that allow for expert portfolio construction and investments starting from as little as 10,000 won. 2nd Place AI ETFs are rapidly gaining popularity due to their low fees and transparency. 3rd Place Individual Stocks are the choice of aggressive investors seeking high returns, while 4th Place Bond Funds are components of portfolios for investors seeking stability. 5th Place Overseas AI Products represent investment strategies betting on the growth of U.S. tech stocks.

Most importantly, it is essential to first determine your investment style, investment period, and target return before selecting products. AI is undoubtedly a future technology, but not all technology investments succeed. Diversification, regular portfolio reviews, and maintaining a long-term perspective are key to succeeding in AI investments.

While the growth trend of the AI industry is expected to continue in the second half of 2024, making investment decisions based on the high returns of the first and second quarters is risky. Please adhere to the 'basics of investing' by analyzing calmly, combining various products, and regularly reviewing your portfolio. AI investment is a marathon. By focusing on steady asset growth rather than quick profits, you can achieve sufficient returns in the long run.