SEOUL, Sept. 8 (Korea Bizwire) — South Korea’s publicly offered overseas investment funds are regaining popularity among local investors, data showed Friday, as they seek tax benefits and higher returns.
According to the data by the Korea Financial Investment Association, the combined net worth of such funds came to 39.4 trillion won (US$34.9 billion) as of Tuesday.
It marks the first time in six years that the value is flirting with the 40 trillion-won mark.
The figure has been hovering below the level since August 2011 as equity-linked funds, which accounted for more than half the total, sharply lost favor with investors. In February last year, the number fell as low as the 27 trillion-won range.
Market watchers said public overseas investment funds are gradually regaining popularity though it still takes up 34 percent of the net worth of all overseas investment funds.
Experts attributed the gain in the net worth of public overseas investment funds to the government’s revival of tax deductions for overseas stocks funds and investors’ search for high returns from overseas property amid low interest rates here.
The net assets of public overseas equity funds rose as high as 14.5 trillion won, with the number for real estate-based funds expanding to some 1.5 trillion won.
“Investors are rushing to overseas equity funds due to their tax benefits,” said Oh Eun-soo, an analyst at KB Securities. “South Korea’s low interest rates have also stoked their appetite for property funds.”
Local investors may show great interest in relatively safer overseas investments as North Korea’s nuclear risk has made the domestic financial market more volatile, Oh added.
In August, South Korea’s central bank left its key rate unchanged at 1.25 percent, keeping its wait-and-see approach for the 14th consecutive month.