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Investment funds suffer cash outflow as retail investors rush to market

SEOUL, June 28 (Yonhap) — Investment funds in South Korea are suffering from a large outflow of cash in a sharp contrast to rising direct investment by individuals, financial industry data showed Sunday.

Some 1,863 investment funds had 86.5 trillion won (US$71.8 billion) in assets under management as of Thursday, down 12.97 trillion won or 13.04 percent from Jan. 2, according to financial market tracker FnGuide data.

The funds include stock-focused, bond-centered and mixed type investment funds.

Since March, when the local stock market hit a yearly nadir amid the coronavirus pandemic, a total of 15.2 trillion won has been drained from the investment funds.

Investment funds suffer cash outflow as retail investors rush to market - 1

Financial experts said a set of misselling fiascos and a liquidity crisis spooked investors.

The “derivatives-linked fund fiasco” struck the heaviest blow to the financial industry late last year, prodding retail investors to pull their money from investment funds.

In contrast, retail investors jumped into the market directly hoping that the market would rebound on the back of a set of stimulus measures and market stabilization steps.

From the year’s start to June 26, retail investors have purchased a net 39.1 trillion won worth of local stocks.

Their top 10 picks delivered an average gain of 71.38 percent in March 19-June 26.

As of Thursday, the amount of stock-related funds hit 134.3 trillion won, up 36.25 percent from the year’s start.

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