SEOUL, May 9 (Korea Bizwire) – Investors have increasingly shifted their money into short-term financial instruments such as money market funds this year as the stock market remains sluggish amid low interest rates, data showed Saturday.
Money market funds (MMFs) are short-term debt securities such as Treasury bills and commercial papers. They are widely considered as safe as bank deposits but with a higher return.
The net asset value of MMFs came to 13.71 trillion won (US$11.86 billion) as of Wednesday, according to market researcher FnGuide.
Bond funds drew a net 2.6 trillion won over the period, while securities funds saw a net 2.2 trillion won of capital outflow, the researcher said.
The capital inflow to the MMFs was mostly attributable to the low interest rates and sagging stock market, which inched up 0.9 percent this year.
The yield rate of funds that invest in overseas and domestic equities fell 7.13 percent and 0.27 percent, respectively, underperforming the MMF’s 0.48 percent, it said.
“Investors are depositing their money in MMFs as the local market has been moving in a tight range while overseas markets remain dull,” Kim Hu-jung, a researcher at Yuanta Securities Korea, said.