Friday, April 10, 2020
More and More Investors Opting for Bond Funds
Stock Fund Vs. Bond Fund
More and More Investors Opting for Bond Funds
  • By Jung Suk-yee
  • March 9, 2016, 02:45
Share articles

Local stock funds lost steam in the wake of the recent global financial crisis.
Local stock funds lost steam in the wake of the recent global financial crisis.

 

The Korea Capital Market Institute announced on March 8 that the respective net assets of bond and stock funds available in Korea reached 90.8013 trillion won and 74.9076 trillion won as of late with the gap widening.

Things were different until 2010. Between 2007 and 2010, the net asset of stock funds was twice to three times that of bond funds. In 2007, the amounts were 135.6 trillion won and 41.2 trillion won, respectively.

However, stock funds lost steam in the wake of the recent global financial crisis. With an increasing number of investors preferring risk-free assets, the net asset of bond funds reached 78.4 trillion won at the end of March last year, exceeding that of stock funds by a margin of 1.3 trillion won. The ratio of stock funds to the total dropped from 42.4 percent to 18.0 percent between the end of 2007 and the end of 2015 while that of bond funds rose from 12.9 percent to 20.6 percent during the same period.

The net asset of bond funds amounted to 90.0757 trillion won on February 19, breaking the 90 trillion won mark for the first time in history. This is attributable to emerging stock market instability and an increasing preference for risk-free investment. Since the beginning of this year, the Shanghai Stock Exchange and Nikkei 225 have lost 19.5 percent and 9.9 percent, respectively. The preference for bond funds is likely to continue for a while along with low interest rates.