EWY’s Dip History Comes With A Catch

Buying a drop in this South Korea ETF has often paid off, but the price of admission was usually more pain first.

Of the 20 times the iShares MSCI South Korea ETF (EWY) has taken a dive like this since 2005, 14 of them were followed by a positive return over the next year. That record might sound encouraging for anyone staring at the fund now, sitting about 15.4% below its 52-week high and wondering if this is a bargain.

But buying a dip involves more than just waiting for a fund to recover. The journey itself matters. And for EWY, history shows the path back up has been anything but smooth.

The Rebound Required A Strong Stomach

While past dips did produce a median return of +13% over the following twelve months, that figure hides a crucial piece of the story. Before any recovery took hold, a dip buyer typically had to endure more downside. The median worst further drawdown in the year after a dip was 13%. That means an investor buying a 10% dip often had to watch their new position fall another 13% before the tide turned. We saw this pattern play out after dips in periods like October 2023 and August 2024. A rebound often came, but it tested an investor’s resolve first.

A Highly Concentrated Basket Explains The Bumps

So, why the volatility? The answer lies in what EWY actually owns. This is not a broadly diversified snapshot of the South Korean economy. The fund holds 78 positions, but its five largest holdings make up a combined 60.9% of the entire portfolio. In fact, just two companies dominate the fund: SK Hynix at 27.7% and Samsung Electronics at 23.8%.

When more than half your fund is tied to the fate of two electronics giants, its performance will be concentrated, not diversified. A dip in this fund is less about a temporary market-wide sale and more about a specific challenge facing its top components. This concentration is what makes the dips sharp and the potential for further downside very real.

For an investor considering EWY, the fund’s own record provides a clear framework. The question isn’t simply whether you believe in a South Korean recovery. It’s whether you’re prepared for the kind of focused risk this fund represents. History suggests that buying a dip here has required the conviction to sit through a significant further decline, a direct result of a portfolio whose fortunes rise and fall with a handful of very large names.

So Is The Dip Worth Buying?

With EWY in the red, the instinct is to treat the discount as a gift and buy more. The history above is a real reason for caution before you do. We know what you are thinking, and it is an absolutely fair question.

Still, a dip-and-recovery record is only half the story. It tells you what tended to happen after past drops, not whether the fund is reasonably valued today or how it is holding up against its peers right now. Before adding to a position, it is worth seeing where it actually stands: our ETF Valuation and Performance Scorecard lines the major ETFs up side by side on valuation, returns, and risk, so the dip becomes one input rather than the whole decision.

One Thing The Index Decides For You

There is also a limit no dip chart can fix. An index fund has to hold whatever its index dictates, so a buyer can end up with money concentrated in a handful of the same names, whether or not they would have chosen them. Buying the dip does not change what is inside the basket.

If you would rather your exposure be chosen than inherited, our High Quality (HQ) Portfolio is built on a different idea: rule-based, multi-factor screening instead of index membership, with 30 names spread deliberately across different kinds of businesses and re-balanced on a schedule so it leans into quality while trimming what has run. It has a record of outpacing a benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000.