Quantity outruns quality in Korea’s fund market

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Quantity outruns quality in Korea’s fund market

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A recent measure showed Korea issued more mutual funds than any other country in the world, but the size of the net assets is not that impressive, according to the Asset Management Association of Korea yesterday.
In a release called “An overview of the global fund industry,” the association said the number of funds issued in Korea as of the third quarter of 2007 was 8,662, higher than any of the 41 other major capital markets in the survey. The runner-up was Luxembourg, which had issued 8,510 through the third quarter of last year, followed by France at 8,182, the United States at 8,021 and Brazil at 3,233. The corresponding figures were 2,925 for Japan and 2,125 for England.
In the second quarter of 2007, the figure was 8,797 for Korea, still at the top of the table, compared with 7,987 for the United States, 2,862 for Japan and 2,086 for England.
The amount of money in local funds, however, was $330.4 billion as of the third quarter of 2007, a meager 15th in the list. The United States led with $11.9 trillion, followed by Luxembourg at $2.6 trillion, France at $2 trillion and Australia at $1.2 trillion. The figures were $951.2 billion for England and $700.6 billion for Japan.
Some analysts say the flood of small funds in Korea was generated because the country went through a major shift in the way it saves money.
“The rising interest in funds as local investors hunt for high-yield investments rather than bank deposits encouraged asset management companies to issue funds quickly,” said an analyst with a Korean brokerage, requesting anonymity.
By type of funds, 37.5 percent issued in Korea were equity funds as of the third quarter 2007, a significant increase from 29.6 percent in the previous quarter, the association said. The figures were 56.3 percent for the United States in the third quarter of 2007, 83.9 percent for Japan and 72.1 percent for England.
Overall, the world’s fund industry grew continuously, the association said. The net asset in funds globally has risen from $11.8 trillion in 2000 to $16.2 trillion in 2004, $21.7 trillion in 2006 and $25.8 trillion as of the third quarter of 2007.


By Moon Gwang-lip Staff Reporter [joe@joongang.co.kr]
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