Even the President's Fund Can't Be Helped

Stock Market Decline Causes Pilseung Korea Fund Returns to Plunge 27% in One Month

[Asia Economy Reporter Oh Ju-yeon] As the stock market plummeted due to the novel coronavirus infection (COVID-19), the fund returns of President Moon Jae-in, who joined a fund last year, also decreased to double digits.

According to financial information company FnGuide on the 26th, as of the 23rd, the recent one-month return of the 'NH-Amundi Pilseung Korea Securities Investment Trust' was -27.18%. This fund invests in domestic companies in the materials, parts, and equipment (SoBuJang) sector in Korea and was launched last July to foster domestic SoBuJang companies amid Japan's export restrictions. President Moon personally visited the NongHyup Bank headquarters in Jung-gu, Seoul, to subscribe to this fund, earning it the nickname 'President's Fund.' At the time, President Moon said, "If we enhance our competitiveness in the materials and parts industry, it will improve the competitiveness and profitability of the entire domestic manufacturing industry."

Although the fund once gained popularity with returns close to 30%, its returns also plummeted along with the domestic stock market decline. The KOSPI rose to an intraday high of 2277.23 on January 20 but plunged vertically to 1439.43 on March 19. It has since rebounded to 1704.91 as of 10:16 a.m. on the day, but it still remains 25.13% below its peak.

The bond mixed product 'NH-Amundi Pilseung Korea30 Securities Investment Trust' also posted negative returns. This product was first established on February 10, and its one-month return has already fallen to -9.34%. Due to the sharp decline in the stock market, all fund returns, whether stocks or bonds, are sliding. The average one-month return of 961 domestic equity funds with assets over 1 billion KRW is -29.19%, and the average return of 268 domestic bond funds is also negative at -0.18%.

However, if the domestic stock market atmosphere stabilizes and moves away from the panic phase, fund returns are expected to recover. Lee Kyung-min, a researcher at Daishin Securities, said, "The policy response of the U.S. Federal Reserve (Fed) has led the global financial market to enter a phase of normalization from panic," adding, "The downside rigidity will become stronger." He further predicted, "Unless another adverse factor emerges in the global financial market, which has already priced in a recession scenario to a considerable extent, attempts at recovery will gain momentum rather than further sharp declines."