Chairman Hwang Young-key of the Korea Financial Investment Association (KOFIA) said private funds have been leading the growth of the fund market, whose value is estimated at 500 trillion won. At the same time, public funds have not been able to claw back to where they were in 2008, showing a great contrast in the fund market.
Private funds made up of fewer than 50 big investors, with investments in diverse areas, have grown at a tremendous pace in the past 10 years, notching 11 percent returns annually and totaling 270 trillion won as of March 31. The number of asset management firms specializing in the private funds has also grown at a fast pace, and expected to total more than 100 this year.
Around 40 new asset management firms have emerged since last October when the private fund management system was reformed. If that trend continues, the number of new asset management firms would total around 100 this year.
A major reason for the explosive growth of asset management firms is the high profits they make. Those private fund management firms have been making 33 percent in accumulated profits in the past five years, some 11 percent higher than public fund management firms. The private fund management firms have been making higher profits than private real estate funds and the special asset funds by 16 percent and 31 percent, respectively.
One of the major reasons for this has been the drastic easing of regulations. The managers of private fund management firms moved fast to cope with market trends and made quick moves to make profits under the eased regulations governing their deals.
The regulations had been softened enough to allow people with just 100 million won to make their products diverse and activities vitalized.
However, one of the problems for the private funds had been that they were restricted to only those with at least 100 million won on hand for investments. Basically, they were limited to the rich. Those with paying around 100,000 won monthly in installment savings and other general investors could not even consider the private funds.
The judgment to protect those whom are economically weak by easing regulations had brought the opposite result, a “paradox of regulations” cutting off ways to join the private funds for middle-class investors, who actually needed access to the fund more than anyone else to make their assets grow.
The government’s reform plan for the financial regulations to allow any individual with 5 million won in funds to join the private funds was very welcome, as anyone with a small amount of money can now have a chance to invest in private funds.
Small investors are allowed to invest in private real estate funds and the funds for any real investment objects, although they have been limited (94 percent) to the private fund institutions and large investors thus far.
The private direct and indirect investment funds have an advantage enjoyed by the public funds in seeking profits and the private funds for protection of investors like hybrid investment funds that diluted the risky factors.
The fund managers can take advantage of the private funds as if they are borrowing investment methods from high-yield private funds, coping with the market in flexible and dynamic ways. Individual investors can make profits if they invest in the private funds which are recommended by asset managers, in much the same way that institutional investors make money from investments in the private funds.
_금융투자 황영기.jpg)
_금융투자본사 01.jpg)
