REITs and Dividend Funds Up, Post-Corona Funds Down

Growing Interest in Assets Resistant to Volatility

[Asia Economy Reporter Minji Lee] This year, funds containing dividend stocks and REITs assets have shown favorable performance. Amid increased volatility in global indices, prolonged index corrections due to economic activity recovery and concerns over interest rate hikes have heightened interest in assets resilient to volatility.

According to financial information provider FnGuide on the 12th, as of the 11th, the ‘Korea Investment US Dividend Aristocrats Fund’ posted a 19.8% return since the beginning of the year. This outperformed domestic equity funds (11%) and overseas equity funds (5%), making it the highest-yielding active fund launched last year. This fund invests in high-dividend companies within the US Standard & Poor’s (S&P) 500 stocks that have a market capitalization of over $3 billion and have increased dividends for 35 consecutive years. It includes companies such as Albemarle, a secondary battery material company; ExxonMobil and Chevron, oil refining stocks; Walgreens Boots Alliance, a health and beauty brand; and AbbVie, a pharmaceutical-related stock.

Among the 266 newly launched funds last year (based on the number of managed funds, excluding equity-linked funds), those containing high-dividend stocks or REITs assets ranked high in returns this year. Funds such as ‘Samsung KODEX TSE Japan REIT Real Estate Fund (17.1%)’, ‘Samsung KODEX Dow Jones US REIT Real Estate Fund (17.6%)’, and ‘Meritz Global High Dividend Securities Investment Trust (16.5%)’ also posted double-digit returns.

The recovery of REIT stock prices is interpreted as being driven by rising residential and commercial real estate assets, mainly in the US. Although there was prolonged sluggishness after COVID-19 last year, the global REIT index has shown an increase of over 10% this year as COVID-19 vaccine distribution and economic recovery expectations spread. Researcher Kyungja Lee of Samsung Securities said, "Despite COVID-19, the fund recorded a favorable dividend yield, and the high dividend yield stimulated investor sentiment," adding, "Changes in fundamental factors such as shareholder value increases due to portfolio restructuring including asset inclusion and disposal also had an impact."

On the other hand, funds launched last year focusing on companies expected to benefit from the ‘post-COVID’ era have shown sluggish performance this year. Exchange-traded funds (ETFs) from Samsung Asset Management, KB Asset Management, NH-Amundi Asset Management, and Korea Investment Trust Management, which track the ‘FnK-New Deal Digital Plus’ index, recorded returns in the 4% range. These invest in so-called ‘BBIG’ (Battery, Bio, Internet, Game) stocks, but due to deteriorating investor sentiment toward growth stocks and changes in the stock market environment caused by rising interest rates, their returns have faltered.