South Korean mutual funds’ net asset value (NAV) rose 2.2% month-on-month to 621 trillion won (US$526 billion) in June, the third consecutive increase since April as the domestic stock market rebounded, according to an industry group.
The funds’ total assets under management rose 1.8% to 615.5 trillion won in June, the Korea Financial Investment Association (KOFIA) says in a monthly report on July 16.
The benchmark Korea Composite Stock Price Index bounced back 3% last month after declining 7.7% in May. KOFIA says the recovery was driven by factors such as foreign buying following the local currency’s depreciation against the US dollar, and prospects of US rate cuts.
All except money market funds posted NAV gains, drawing a net 9.1 trillion won of total capital inflows.
Special asset funds, which invest in alternatives such as private debt, attracted the largest net inflow of 4.2 trillion won, followed by 2.5 trillion won into real estate funds and 2.08 trillion won into securities funds.
Money market funds registered a net outflow of 3.4 trillion won and their NAV fell 3.1% to 104 trillion won due to semi-annual corporate demand for financing and portfolio rebalancing, KOFIA says.
The pullout may be temporary because investors are still cautious about risk given global market uncertainties, such as China’s economic slowdown, according to a Shenzhen-based fund analyst.
“With a risk-off market mood, [investors] will still look into [money market funds] and fixed income funds over the longer term in order to lower the volatility in their portfolios,” the analyst tells Asia Asset Management, speaking on condition of anonymity.