Domestic fund net assets in South Korea turned downward in the third quarter of this year for the first time in over four years due to expanding stock market volatility.

The Korea Financial Investment Association announced today (October 30) that the total net assets of public and private funds stood at 1,646.7 trillion won as of the end of September, down 87.8 trillion won (5.1%) from the end of June.

This marks the first time that quarterly fund net assets have decreased since the second quarter of 2022.

The decrease in net assets was driven more by the contraction of the stock market than by capital outflows.

While 46.9 trillion won flowed into funds on a net basis during the third quarter, the KOSPI dropped 19.3% from 8,476.5 at the end of June to 6,838.0 at the end of September. This drove a 58.2 trillion won decline in equity fund net assets, leading the overall decrease.

By category, equity fund net assets dropped 13.0% from the previous quarter to 387.8 trillion won, and derivative funds fell by 24.2 trillion won, highlighting a clear downward trend in stock market-related products.

In contrast, money market funds (MMFs), which manage short-term funds, increased by 7.6 trillion won, and bond funds rose by 700 billion won.

Public funds, which were relatively more affected by the stock market, experienced a larger drop in net assets compared to private funds.

Public fund net assets decreased by 7.5% from the previous quarter to 830.4 trillion won, while private funds fell 2.5% to 816.3 trillion won.

Among public funds, exchange-traded funds (ETFs), which account for a large portion, saw their net assets decrease by 54.7 trillion won (10.7%) from the previous quarter to 457.7 trillion won.

Equity ETFs dropped 11.4% and derivative ETFs fell 18.1%, dragging down the overall ETF scale.

However, despite the decrease, public fund net assets remained larger than those of private funds.

As of the end of September, public funds accounted for 50.4% and private funds for 49.6% of all funds.
 
(Photo: Yonhap News)