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Investors fleeing stock-invested funds on chronic low profit

All News 09:52 January 20, 2017

SEOUL, Jan. 20 (Yonhap) -- Stock-invested funds have lost their luster, their size now less than half of what they used to be 10 years ago as their unattractive profit showings shed investors, finance industry data indicated Friday.

According to the Korea Financial Investment Association, money in local stock-invested funds totaled 73.69 trillion won (US$62.55 billion) at the end of last year, or 15.7 percent of total funds summed at 469.31 trillion won. On a year-end tally basis, the ratio is the lowest in 11 years.

The proportion of stock-invested funds had peaked at 39.3 percent in 2007 when star analysts wielding extraordinary profit rates stirred up stock investment boom. The money in securities-investment funds grew from 46 trillion won in 2006 to 116 trillion won in 2007 and to 140 trillion won the following year.

The pivot started to come in 2008 following the global financial bust from the Lehman Brothers crisis, the proportion of stock-invested funds falling from 39 percent to 38 percent in 2009 and to 29.8 percent by 2012. It dropped to under 20 percent in 2015.

Analysis by market tracker Fn Guide showed that the average profit rate as of Wednesday for stock funds of over 1 billion won was 3.5 percent for a three-year investment and 16.83 percent for a five-year. The rate for foreign stocks funds was 9.48 percent for a three-year and 20.96 percent for a five-year.

Data indicated that money taken out of stock funds went to real estate and special asset funds. The money in real estate funds jumped to 45.69 trillion won last year from 4.97 trillion won in 2006. Special asset funds drew 48.72 trillion won last year, compared to 3.93 trillion won in 2006.

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