Why These South Korea-Focused ETFs Have More Than Doubled in 2026

Key Points

• South Korean equities are on a tear thanks to a weakened dollar, AI dominance, and other factors.
• ETFs can be a great way to gain exposure to this international basket of stocks, with some funds more than doubling YTD.
• Important distinctions in cost, portfolio size, and fund structure set some of the leading South Korea-focused ETFs apart.

A combination of a weaker U.S. dollar, a push among retail and institutional investors alike toward international investments, and increasing demand for AI exposure have all positioned South Korea as a country to watch in 2026. Companies like Samsung Electronics and SK Hynix are at the center of the semiconductor industry, responsible for AI and with demand for memory and hardware components far outstripping supply, these companies can reap significant benefits.

Seasoned investors may be inclined to overlook South Korea, even despite these benefits, because of the country's reputation for having stocks that trade at a lower valuation than some of their global rivals. For one thing, South Korea's market was a global top performer in 2025. Further, this situation may be in the midst of change as the government's Corporate Value-Up program seeks to improve capital efficiency and governance. In any event, South Korean exchange-traded funds (ETFs) have been on an incredible run in 2026, and it may not be too late for investors to buy in.

The Go-To Korean Fund Is Expensive But a Strong Performer

The iShares MSCI South Korea ETF NYSEARCA: EWY is a gold standard among country-specific funds and the largest of the relatively small number of ETFs targeting South Korean equities. The fund has more than $26 billion in assets under management (AUM) and a very healthy one-month average trading volume topping 20 million.

That said, EWY is neither the cheapest nor the most diversified South Korean fund. It carries a fairly high expense ratio of 0.59% and devotes roughly half of its assets to shares of the two tech powerhouses mentioned above. In total, the portfolio numbers about 80 stocks, but allocation drops off significantly after Samsung and SK Hynix; the next-largest position is only 4% of the portfolio. The basket pays a decent dividend yield of 1.05%.

EWY's popularity may be due to its exceptional track record of performance, including an improvement of about 125% year-to-date (YTD). Additionally, for investors concerned about stability, the fund's long history extending back more than 25 years helps to ensure that it will remain a staple for investors seeking international exposure for the foreseeable future.

A Lower-Cost Alternative With Some Important Drawbacks

For a newer alternative in this fairly niche corner of the ETF market, investors might consider the Franklin FTSE South Korea ETF NYSEARCA: FLKR. While EWY skews overwhelmingly toward large-cap companies, FLKR allows a small portion (about 10%) of its portfolio to focus on mid-cap and smaller firms. This variety, combined with a list of positions about twice as long as EWY's, means that FLKR may provide a more holistic and diversified view of the South Korean market.

Another key advantage FLKR has over its well-established rival is its fee. FLKR has a much lower expense ratio than EWY at just 0.09%, making it especially appealing to investors seeking low-cost options to minimize the drag that annual fees can have on returns. A trade-off, however, is that FLKR's AUM is just a fraction of EWY's at $1.4 billion, and its trading volume is similarly much lower as well. On the other hand, FLKR offers a more compelling dividend yield of 1.93%, so there are advantages to either of these funds depending upon an investor's goals.

FLKR has matched EWY's performance almost exactly YTD, so both of these ETFs are well ahead of the broader market in 2026.

A Risky Leveraged Play That Can Reap Big Rewards

For strongly bullish investors with a healthy risk appetite, the Direxion Daily MSCI South Korea Bull 3x Shares NYSEARCA: KORU is a leveraged play that aims for triple the daily results of its underlying index. KORU focuses on the same index as EWY, making it similarly heavily exposed to Samsung and SK Hynix. On days when these stocks perform well, investors can look to KORU for massive one-day gains.

On the other hand, of course, KORU also amplified declines in its underlying index as well. Like most leveraged funds, this one is not intended for long-term investment beyond the scope of a single day of trading. With an AUM and trading volume on par with FLKR, KORU should not give investors significant liquidity concerns, but active trading is necessary with this fund to avoid deviating from the intended performance metric.

KORU carries an expense ratio of 1.32%, making it by far the most expensive fund on this list. However, given the impressive track record of Korean stocks over the past quarters, the potential for significant returns may outweigh any cost concerns for risk-tolerant investors.