The size of foreign investment funds available in South Korea increased from 135.94 trillion won to 183.69 trillion won in 2019 alone and more than doubled in three years. The net asset value of the funds was more than 190.87 trillion won at the end of last year.
Such a rapid growth has to do with last year’s domestic stock market slump and low interest rates. With very low interest rates continuing, investment firms raised more capital with ease and found profitable investment opportunities such as overseas real estates.
Individual investors disappointed by the South Korean stock market flocked to foreign investment funds. Especially, overseas real estates and alternative investments led the growth of the funds. Specifically, funds investing in overseas real estate properties accounted for 29 percent of the market, and they were followed by those for international alternative investment (45.99 trillion won), funds of funds (27.17 trillion won), stock funds (17.97 trillion won), derivative funds (17.31 trillion won), and bond funds (8.22 trillion won).
Overseas real estate funds with a size of at least one billion won posted an average return of 9.75 percent in 2019. Especially, the average return of funds for global REITs investment amounted to 20.43 percent. Foreign stock funds gained 27.39 percent and those investing in Russia and China gained more than 30 percent.
The global funds were private equity funds in many cases. Specifically, such funds added up to 146 trillion won last year, 74 percent of the total.