MMF Outflows and Stock Market Decline Lead to 45.7 Trillion KRW Decrease in Fund Net Assets in March

[Asia Economy Reporter Oh Joo-yeon] Last month, as funds flowed out of money market funds (MMFs) and stock prices declined, the total net assets of domestic funds decreased.

According to the "March Domestic Fund Market Trend Analysis" released by the Korea Financial Investment Association on the 7th, as of the end of March, the net asset size of domestic funds stood at 646.2 trillion KRW, down 45.7 trillion KRW (6.6%) from the previous month.

By fund type, the net assets of MMFs, which are short-term financial products, recorded 120.8 trillion KRW, a decrease of 23.7 trillion KRW (16.4%) compared to the end of the previous month. The Korea Financial Investment Association explained that due to quarter-end cash demand and concerns over tightening in some short-term financial products, there was a net outflow of 23.8 trillion KRW from MMFs. Due to interest rate instability and other factors, bond funds also saw an outflow of 8.1 trillion KRW. Accordingly, the net assets of bond funds decreased by 8.7 trillion KRW (7.1%) to 114.4 trillion KRW.

Although the KOSPI fell to its lowest level in 10 years and 8 months last month, there was no large-scale outflow of funds from equity funds. Equity funds rather recorded a net inflow of 2.2 billion KRW. However, due to the decline in stock prices and the resulting decrease in valuation, the net assets of equity funds decreased by 9 trillion KRW (11.4%) from the end of the previous month to 69.5 trillion KRW.

Net assets of real estate funds increased by 700 billion KRW (0.6%) to 105.1 trillion KRW. Net assets of special assets funds rose by 60 billion KRW (1.5%) to 95.4 trillion KRW, while net assets of mixed asset funds decreased by 1.1 trillion KRW (3.1%) to 35.9 trillion KRW. Derivative funds experienced a net outflow, with net assets decreasing by 110 billion KRW (2.3%) to 46.8 trillion KRW.

As of the end of March, the total fund subscription amount was 659 trillion KRW, down 30.3 trillion KRW (4.4%) from the previous month.

Shin Dong-jun, head of the asset management division at the Korea Financial Investment Association, said, "Although there was an outflow of funds from MMFs, the tension is expected to ease as outflow funds return after the quarter-end." He added, "However, since financial market volatility remains high, we will carefully monitor the inflow and outflow status of funds in these funds."