Investors poured billions into leveraged semiconductor funds during July and August despite heavy losses, attempting to catch a rebound in the sector. The Direxion Daily Semiconductor Bull 3X Shares attracted nearly $7bn in net inflows in July and the first two weeks of August, per Morningstar data. The fund offers triple-leveraged exposure to the NYSE Semiconductor Index, which fell over 20% from its peak, while the fund itself plunged 70% from its June high to its low.

Single-stock leveraged funds tracking SK Hynix and Sandisk also drew significant inflows. A CSOP Asset Management fund offering double daily returns on SK Hynix pulled in over $1bn in six weeks despite an 86% peak-to-trough drop. A Sandisk leveraged ETF saw $350mn in net inflows even as it fell 85% from its June high to July low. Analysts at Goldman Sachs and Barclays describe this as a persistent "buy the dip" strategy, likening it to catching a falling knife.

Retail investors in South Korea were hit hard, with Goldman Sachs estimating over 1.2mn leveraged accounts triggered margin calls in mid-July. Korean regulators imposed new exposure caps and mandatory week-long courses for single-stock fund trading. Yet inflows continue, prompting concern from M&G's Fabiana Fedeli that speculative behavior remains unchanged and regulatory steps may be insufficient.