The exchange traded notes market in South Korea has grown exponentially since its debut on the local stock market a year ago on the back of robust demand for less risky investment, the country's main bourse operator said Monday.

The average daily turnover of ETNs reached 42.1 billion won ($36.5 million) as of last Friday, compared with 187 million won tallied during the first month of its launch in November last year, according to the data by the Korea Exchange.

An ETN is a type of debt security whose returns are based on the performance of various market benchmarks. They are hailed as a safer and higher return investment destination with risk-hedging tools at a time of low interest.

Similar to bonds and exchange traded funds, ETNs are traded on the main exchange during normal trading hours.

Its daily turnover had fallen far short of market analysts' initial expectations in the first couple of months of its debut, hovering below 1 billion won, before gradually climbing to surpass the 10 billion-won mark for the first time in August.

The spike in turnover is largely attributable to its strength as a financial investment tool that entails less risks and volatility, the bourse operator said.

"Like ETFs, ETNs allow investors to diversify the portfolios based on the underlying benchmark indexes, which has been a point of attraction for investors who seek mid-risk, mid-return these days," a KRX official said.

Last Tuesday, the daily turnover of the ETNs reached a fresh record high of 66.1 billion won, according to the main Seoul bourse. (Yonhap)