ISAs draw big bucks in first month of release

As near-zero interest rates continue, more than 1 trillion won ($879 million) has flocked to the new individual savings account (ISA) in the first month of its release.

According to the Korea Financial Investment Association on Tuesday, a total of 1.084 trillion won as of April 15 had been put into ISA products sold at 13 major commercial banks and 19 brokerage firms since the ISA launched on March 14.

More than 1.5 million subscribers were registered with an average 670,000 won.

When it comes to sheer numbers of customers, banks beat brokerages by absorbing more than 90 percent of the customers.

Only 9.5 percent did so brokerages, while 0.1 percent subscribed at insurance companies.

Of 1.084 trillion won drawn into ISA products, banks attracted 62 percent, or 682 billion won, while the brokerages did about 38 percent, or 379.3 billion won.

But brokerages, with their manpower and experience with asset management, beat banks when it came to attracting deep-pocketed investors.

Brokerages saw each of their customers put in an average of 2.66 million won per account, while bank customers averaged only about 460,000 won.

Of the two types of ISAs, 96 percent of investments, or 971.9 billion won, flocked to the ISA in trust, in which the subscribers voluntarily allocate their assets, while only about 4 percent, or 36.5 billion won, was allocated to the entrusted ISAs, in which customers give entire rights of asset management decisions to professional asset managers.

The financial regulator launched the new investment system to encourage more people to supplement their income with returns from investing mid-risk, mid-return funds, securities or bonds.

BY KIM JI-YOON [kim.jiyoon@joongang.co.kr]