Injoys
Zombie ETFs are products that remain listed despite having very little trading activity. Low trading activity alone does not lead to immediate delisting. If you hold one, check both its net assets and actual ask prices.
The figures on low trading activity come from a tally as of October 2, published in Maekyung ECONOMY's October 8, 2026 report.
What Zombie ETFs Are and the Extent of Low Trading Activity
Zombie ETF is an informal term for an ETF that trades infrequently. It is not a separate product category defined by the exchange. Classification criteria may therefore differ between articles.
Maekyung ECONOMY reported the following figures, citing a Korea Exchange tally. Trading value was measured over the six months before the reference date. Products with an average daily trading value of less than KRW 100 million accounted for more than 20% of the total.
| Category | Reported figures as of October 2, 2026 |
|---|---|
| All ETFs listed in Korea | 1,171 |
| Average daily trading value of less than KRW 100 million over the past six months | 239 |
| Meeting both the trading value condition above and an average daily trading volume of less than 5,000 units | 186 |
The figures of 239 and 186 were counted using different conditions. Adding the two groups would count the same products twice. These figures alone also do not establish that every product is difficult to sell. Maekyung ECONOMY tally of low trading activity
After an ETF is delisted, redemption payments are based on net asset value and do not guarantee the original investment.
Why Some Products Have Low Trading Activity
Launching similar thematic products at the same time can spread trading across them. Investor demand may then concentrate on a few leading products. If interest in the theme also declines, trading in the remaining products falls further.
Space industry and metaverse ETFs illustrate this competition. On October 13, 2021, four metaverse ETFs were listed together. Low trading activity in some products was later reported.
An increase in the number of products does not mean their investment strategies are distinct. Even products with different names may hold overlapping securities. When comparing them, check the following.
- How the underlying index or benchmark index is constructed
- Major holdings and the weight of each holding
- Whether currency exposure is hedged and how the fund is managed
- Costs beyond the total fee and actual trading conditions
Fee cuts help reduce holding costs. However, wide bid-ask spreads can increase trading costs. It is difficult to choose a product based on its fee rate alone.
Delisting Criteria for ETFs in Korea
Low trading value alone does not lead to immediate delisting. Decisions follow separate criteria, including minimum size requirements and liquidity provision agreements. Even if a product's size exceeds the threshold, other grounds for delisting may arise.
The Korea Exchange applies its criteria for managing small ETFs in the following order.
- Check whether one year has passed since the listing date.
- Assess trust principal and total net assets at the end of the half-year.
- Designate the ETF as an issue under administration if both amounts are less than KRW 5 billion.
- Delist it if the same grounds persist at the end of the following half-year.
Trust principal is the principal amount reflecting fund creations and redemptions. Total net assets are the fund's assets minus its liabilities. The size requirement checks whether both amounts are less than KRW 5 billion.
The size criterion in the Korea Exchange's “ETF Delisting” guide is as follows.
Where an ETF has been designated as an issue under administration because its trust principal (capital) and total net assets are less than KRW 5 billion, and the same grounds persist at the end of the following half-year
Net assets alone therefore cannot determine whether a listing will be maintained. The absence of an LP agreement or termination of the investment trust are separate grounds. Check the latest disclosures for the grounds that apply to an individual product. Korea Exchange delisting guide
How Does Voluntary Termination Differ from Falling Below the Size Requirement?
An asset manager's voluntary termination of an investment trust is a different procedure from the exchange's size review. Small funds that meet certain requirements can already be voluntarily terminated. It is inaccurate to say that no voluntary closure mechanism exists.
| Category | What is assessed | Points to note when interpreting it |
|---|---|---|
| Failure to meet minimum size requirements | Principal and net assets at the end of the half-year, and whether the grounds persist | A temporary decline in net assets alone does not establish the outcome |
| Voluntary termination of a small investment trust | Statutory termination requirements and the asset manager's decision | Separate from the procedure for designation as an issue under administration |
| Expiration of the fund's term | Arrival of the end date set when the fund was established | Includes scheduled closures unrelated to low trading activity |
| Failure to meet the correlation coefficient requirement | How closely the daily movements of the ETF and its index resemble each other | A different criterion from poor returns alone |
The total number of delistings cannot be treated as the number of zombie ETFs. It also includes products that close as planned when their terms expire. The Korea Capital Market Institute explained this distinction in its October 2026 report. Changes in the Reasons for ETF Delistings in Korea and Points for Investors to Note
Conditions Compared: Trading Volume and the Ability to Sell
To assess actual selling conditions, look at both trading volume and current quotes. Trading volume is the quantity already traded. Quotes are the prices currently offered to buy or sell.
A liquidity provider (LP) is an institution that posts bid and ask quotes. LP quotes make trading possible even for ETFs that trade infrequently. They do not, however, guarantee execution at your desired price and quantity. Korea Exchange guide to the LP system
| Product's current condition | Interpretation | What to check |
|---|---|---|
| Low trading volume but sufficient bid and ask quotes | Past trading volume alone is not enough to conclude that selling will be difficult | Outstanding buy orders that can absorb your order quantity |
| Low trading volume and a wide bid-ask spread | Trading at your desired price may be difficult | Difference between bid and ask prices |
| Large net assets but infrequent trading | Asset size and trading activity are separate matters | LP quotes and trading value trends |
| Active trading but a sharp drop in the theme's stock prices | Ease of trading and investment loss risk are separate matters | Holdings and price movements |
| Disclosures concerning designation as an issue under administration or delisting | Assessment must follow the disclosed grounds and schedule | Whether the grounds have been resolved and the trading suspension date |
The difference between the ask price and the bid price is called the bid-ask spread. If this gap is wide, you may have to accept an unfavorable price when trading. If you hold a large quantity, also check outstanding buy orders at each price level.
