Large-Cap Rally Boosts 'Group Stock Funds' Reputation

Inflow of Funds Driven by Strong Returns from Guitar Group Stocks and Samsung Group Stocks

[Asia Economy Reporter Song Hwajeong] As the large-cap rally continues at the beginning of the year, group stock funds are showing favorable returns.

According to financial information provider FnGuide on the 13th, the return on other group stock funds since the beginning of the year was 13.53%, the highest among 43 theme funds. Samsung group stock funds also ranked high with a return of 9.11%.

By fund, Mirae Asset TIGER Hyundai Motor Group+ Securities Listed Index Investment Trust [Stock] showed the highest return at 23.77%, and KB KBSTAR 5 Major Group Stock Listed Index Securities Investment Trust (Stock) recorded a return of 15.51%. Kiwoom Next Generation Mobility Securities Investment Trust 1 [Stock] A-e had 17.8%, Mirae Asset 5 Major Group Representative Securities Investment Trust 1 (Stock) Class A had 14.89%, and Mirae Asset TIGER LG Group+ Listed Index Investment Trust [Stock] posted a return of 9.34%. Among Samsung group stock funds, Korea Investment KINDEX Samsung Group Stock SW Securities Listed Index Investment Trust (Stock) rose 9.76%, Samsung KODEX Samsung Group Stock Securities Listed Index Investment Trust [Stock] rose 9.75%, and Mirae Asset TIGER Samsung Group Securities Listed Index Investment Trust (Stock) rose 9.73%, respectively.

Funds are also flowing in due to this strong performance. In the past week, 1.7 billion KRW flowed into other group stock funds, and 48.8 billion KRW flowed into Samsung group stock funds.

As the strong market centered on large-cap stocks continues, related funds are expected to maintain favorable returns. Lee Jaeseon, a researcher at Hana Financial Investment, said, "The explosive rise of the KOSPI was backed by the strong performance of group stocks," adding, "Large group stocks such as Samsung, Hyundai Motor, SK, LG, and Lotte contributed about 80% to the increase in KOSPI market capitalization since the beginning of the year." The recent strength of group stocks is analyzed to be due to their sufficient cash holdings. The researcher explained, "The reason the market focuses on large corporate group stocks is that they are ‘cash-rich’ representatives of each industry," and "In 2021, the cash assets of group stocks are estimated at about 205 trillion KRW, which is about 68% of the total cash assets of all KOSPI-listed companies. The abundant cash holdings mean that the environment is set for future mergers and acquisitions (M&A) related to new businesses to be realized."