SEOUL, Dec. 2 (Korea Bizwire) — South Korea’s social responsibility investment (SRI) market is growing rapidly due to interest in investments that place importance on the environment, social responsibility, and governance (ESG).
Asset management firms have steadily introduced related funds this year as SRI has grown in importance and the market is expected to expand amid the sluggish domestic public offering fund market.
Last month, Samsung Asset Management listed ‘KODEX 200ESG,’ an exchange traded fund that uses the KOSPI 200 ESG as the base index.
Stocks that have good ESG performance on KOSPI 200 is subjected to be included in are included in the exchange traded fund (ETF). This brings the number of listed ETFs in South Korea, consisting of ESG-related stocks, to seven.
Meanwhile, the return on SRI funds is quite good.
The average yield of 30 domestic SRI funds – including ETFs – with a set value of 1 billion won (US$845,230) or more since the beginning of the year was 3.13 percent as of November 28, according to FnGuide, the finance information provider.
The rate is far higher than the average return rate of 0.70 percent for active stock funds in South Korea during the same period.
Currently, Korea has 358.7 billion won invested in SRI funds and 380.9 billion won in net assets.
“Companies with higher ESG ratings are more likely to have a competitive edge in many aspects such as resource utilization, human resource management and governance than competitors with lower grades,” said Kim Jae-eun, a researcher at NH Investment & Securities Co., who went on to say that “by utilizing their competitive edge, companies can make a profit and pay dividends.”
D. M. Park (firstname.lastname@example.org)