Retail Investors Flock to Indirect Investments... ETF Market Sees Net Inflow This Year

As of the End of Last Month, Net Inflow of 3.666 Trillion KRW
Record High of 58 New ETFs This Year
Overseas Secondary Battery & Tech Companies, Domestic Metaverse ETFs Popular

[Asia Economy Reporter Minji Lee] Individual investors who engaged in individual stock investments last year have flocked to the fund market this year, resulting in the exchange-traded fund (ETF) market turning to a net inflow trend after one year. As the returns on individual stocks declined, the net outflow scale of overall equity funds also decreased compared to before.

According to Shin Young Securities on the 9th, as of last month, the ETF market showed a net inflow of 3.666 trillion KRW this year. ETFs investing in domestic stocks, which experienced a net outflow of over 9 trillion KRW last year, saw a net inflow of 1.8838 trillion KRW this year. Amid the launch of various products including active ETFs, secondary batteries, metaverse, and ESG (environment, social, governance), investors turned their attention to indirect investment instead of individual stocks as the stock market adjusted due to monetary policy shifts in major countries in the second half of the year. In particular, metaverse-related ETFs gained significant popularity. ‘KODEXK-Metaverse Active’ and ‘TIGER Fn Metaverse’ attracted funds of 316.4 billion KRW and 283.7 billion KRW respectively.

The assets under management for overseas equity ETFs also increased significantly. Among ETFs listed this year, the one that attracted the most funds was an ETF investing in U.S. stocks. ‘TIGER US Tech TOP10 INDXX’, listed in April this year, gathered a total of 786 billion KRW, while ‘TIGER US Philadelphia Semiconductor Nasdaq’ and ‘TIGER Global Lithium & Secondary Battery SOLACTIVE’ recorded assets under management of 652.5 billion KRW and 596.6 billion KRW respectively.

Researcher Kwangyoung Oh of Shin Young Securities said, "A record high was achieved with a total of 58 new ETFs launched since the beginning of the year, and growth continued with the introduction of new thematic ETFs," adding, "Reflecting the price increase of investment assets, the total assets increased by 34% compared to last year, reaching 69.68 trillion KRW."

As investor interest in direct investment declined, the amount of funds flowing into general equity funds also increased compared to last year. Excluding ETFs, domestic equity funds saw an inflow of 960 billion KRW in the second half alone. On an annual basis, institutions withdrew a total of 2.9619 trillion KRW due to asset allocation adjustments at the beginning of the year, showing a net outflow for three consecutive years. However, considering that 6.9 trillion KRW was withdrawn last year, the inflow scale is analyzed to have increased compared to before. For overseas equity funds, regionally, North American funds attracted about 3.4 trillion KRW, showing an increase for two consecutive years, and global funds related to tech, electric vehicles, and batteries attracted about 2.2 trillion KRW.

Meanwhile, interest in public equity funds including ETFs investing in overseas assets is expected to grow further next year. Researcher Kwangyoung Oh analyzed, “In an era of low interest rates and low growth, overseas investment increase is essential,” adding, “In the ETF market, as financial authorities are considering easing the correlation coefficient (0.7) regulation on active ETFs, the number of asset management companies launching new ETFs is expected to increase.”