This file photo shows the buildings of South Korea’s major companies in Seoul. (Yonhap)
SEOUL, April 12 (Korea Bizwire) — Investment funds in South Korea that consider environmental, social and governance (ESG) factors in investment decisions are emerging as a hot trend in the nation’s financial industry.
The number of financial products that are classified as equity ESG funds among domestic public offering funds as of Thursday totaled 36 with a combined valuation of 1.18 trillion won (US$1.05 billion), according to the data compiled by market research firm FnGuide.
Given that 523.3 billion won or half of the total valuation increased this year, ESG funds are growing at a blistering pace.
The funds with a higher ESG grade recorded outstanding performances last year, drawing explosive interest from the financial industry.
The KRX ESG Social Responsibility Management Index calculated by the Korea Exchange, South Korea’s bourse operator, marked a growth of 81.83 percent over the past year, exceeding the benchmark Korea Composite Stock Price Index (KOSPI) yield rate of 73.31 percent.
The Midas Responsibility Investment Fund (A1 Class based), one of the nation’s top-rated active-type ESG public offering funds, registered a higher one-year yield rate of 84.77 percent as of Friday.
Some experts, however, warned caution about so-called ‘greenwashing,’ that is, an ordinary fund making false or misleading claims to appear to be an ESG fund.
“At present, it’s difficult for general investors to identify the actual ESG level of the ESG funds simply with publicly disclosed information,” said Park Hye-jin, a research fellow at the Korea Capital Market Institute.
J. S. Shin (js_shin@koreabizwire.com)
