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Mirae pulls the plug on Indian fund

July 23,2008
Korea’s largest asset management company recently canceled a fund investing in India due to mounting losses, according to the company.

Mirae Asset Investments said its investors agreed on July 15 that the India Value Equity fund 1CLASS-C2 should be discontinued.

The fund had posted a minus 20.1 percent return rate since last October, when it was created.

The value of the fund shrank from 10 billion won ($9.8 million) to 7.9 billion won during the period. The remaining money was distributed to investors, the company said.

According to Zeroin, a local fund evaluator, 10 other overseas equity funds also called it quits this year.

But Mirae’s India fund grabbed the attention of local analysts as it was the first India-based fund to fail. Mirae and other local asset mangers have been putting weight on both India and China.

Analysts were concerned that this could be the beginning of a “fund run,” an exodus of investors from fund investment. As of yesterday, a total of 26 India funds have posted a collective minus 36.9 percent return rate this year.

A Mirae official, requesting anonymity, said such fears are unfounded. He said the return rates for India funds have risen recently. The average return rate of the Indian funds over the past month through yesterday was 2.7 percent. The official also said the Indian equity market is just part of its diversified fund investment portfolio.

Clemens Kang, an analyst at Woori Investment and Securities, said he also thinks a fund run is unlikely.

“People try to retreat when the return rate is minus 5 percent to 10 percent. Currently, the return rates are too low to draw back,” he said.


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


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