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Biz News Korea(Eng)

Hedge funds surge on increasing popularity among the Korean rich

Collected: 2016.09.06

Distributed: 2016.09.07

Source: Go Direct

With hedge funds emerging as investment target of South Korean rich investors, asset under management (AUM) of hedge funds exceeded 6 trillion won ($5.42 billion) six years after such investment option was first introduced in late 2011.

According to the financial investment circles on Monday, AUM of hedge fund management companies stood at 6.24 trillion won as of late August, exceeding 6 trillion won for the first time this year. It had taken about four years for AUM of hedge funds to increase 2 trillion won at the initial stage but just seven months to stretch 3 trillion won lately.

Experts in the asset management circles believe that the nation’s wealthy people increasingly prefer higher-yielding hedge funds as alternative investments over equity funds. The nation’s equity funds except exchange traded funds (ETFs) saw fund outflows for the 23 consecutive trading days until August 31. During the period, net outflow of money amounted to as much as 2 trillion won.

Most of active funds have recorded poor return rates, underperforming the benchmark yield. Amid increasing demand, the number of hedge fund management companies increased to 49. Capital in hedge funds will likely exceed 8 trillion won by the end of the year as securities companies also have been allowed to sell hedge funds.

By Kim Hye-soon

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