Public Funds See Inflows into Domestic Equity-Type Products
Scale Surpasses Overseas Equity Funds
“1,100% One-Year Return” Leverage Products Emerge
As expectations rise for an end to the conflict between the United States and Iran, optimism is returning to the domestic stock market, resulting in a surge of funds flowing into publicly offered funds focused on domestic equities. Thanks to the bullish market, some funds have achieved returns exceeding 1,000%.
According to FnGuide on June 19, the amount of funds raised for publicly offered domestic equity funds increased by 1.5507 trillion won in the one-week period ending on June 17. By comparison, overseas equity funds saw an increase of only 683.1 billion won during the same period.
As domestic equity funds gained popularity, their scale also surpassed that of overseas equity funds. On December 26 last year, the amount raised for domestic equity funds stood at 65.5457 trillion won, which was lower than the 64.3289 trillion won for overseas equity funds. However, as of June 17, domestic equity funds had grown to 96.8864 trillion won, while overseas equity funds reached 73.2752 trillion won, meaning domestic equity funds were about 23 trillion won larger in scale than their overseas counterparts.
The robust returns are a key reason for the influx of capital into domestic equity funds. The KOSPI, which was at the 4,200 level at the end of last year, surged to 8,800 by June 17, driving domestic equity fund returns sharply higher. The average six-month return was 117.90%, and the one-year average was 200.22%—about four times higher than the 24.54% and 52.87% delivered by overseas equity funds over the same periods.
Some domestic equity funds have even posted one-year returns exceeding 1,000%. According to Fund Guide, the ‘Hanwha 2.2x Leverage Index Securities Investment Trust (Equity-Derivative Indirect Type) Class A’ achieved a one-year return of 1,111.86%. Excluding three exchange-traded funds (ETFs), this product recorded the highest one-year return. This is a high-risk fund that invests indirectly in leverage ETFs to track approximately 2.2 times the daily return of the KOSPI200 index.
Domestic equity funds eligible for retirement pension investment have also posted high one-year returns, in the 300% range. ‘Mirae Asset Core Tech Securities Investment Trust (Equity) Class C-P2e’ had a one-year return of 368.15%, the highest among pension fund products. This fund has recently maintained high allocations to stocks with strong returns, such as Samsung Electronics (25.06%), SK hynix (14.42%), SK Square (7.95%), and Samsung Electro-Mechanics (4.70%).
In contrast, capital is flowing out of bond funds, which have delivered lower returns than equity funds. According to FnGuide, during the one-week period ending on June 17, the amount raised for publicly offered bond funds fell by 703 billion won for domestic funds and by 431.1 billion won for overseas funds.
Industry insiders explain that, when dealing with similar asset classes, publicly offered funds may be better suited for long-term investment compared to ETFs. An official at an asset management company commented, “With ETFs, the convenience of trading can lead to excessive transactions, which can be a disadvantage. Using mutual funds can be advantageous as it effectively enforces a ‘forced long-term investment’ approach.”
This content was produced with the assistance of AI translation services.
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