Bank retirement funds jump into ETFs amid stock market boom

(Yonhap)

Even traditionally conservative bank-managed retirement pension investors are increasingly turning to exchange-traded funds (ETFs), riding an unprecedented stock market rally.

According to industry sources Thursday, ETF assets held in retirement pension accounts at South Korea’s four major commercial banks — KB Kookmin Bank, Shinhan Bank, Hana Bank and Woori Bank — totaled 10.73 trillion won ($7.36 billion) at the end of last year. That figure marked more than a threefold jump from 3.29 trillion won recorded at the end of December a year earlier.

Retirement pension ETF balances expanded steadily throughout last year, surpassing 4 trillion won by the end of March, 5 trillion won by June, and 7 trillion won by September, before finally exceeding the 10 trillion won mark at year-end.

The pace has accelerated further this year as the KOSPI’s upward momentum has strengthened. As of Jan. 16, ETF assets in retirement pension accounts at the four banks had risen to 12.13 trillion won, an increase of roughly 1.4 trillion won in just the first two weeks of the year.

Shinhan Bank stood out in particular, with its retirement pension ETF balance reaching 4.09 trillion won, becoming the first in the industry to surpass the 4 trillion won threshold. The bank said the balance grew by about 500 billion won this year alone, helped by a full revamp of its “My SOL Retirement Pension” service last year and an expansion of its ETF lineup to 237 products — the widest range among peers.

“Investors who manage their retirement pension accounts through banks tend to have stable and conservative investment preferences,” a bank official said. “But as the KOSPI surged to an all-time high above 5,000 points for the first time, awareness is growing that deposits and savings accounts alone are no longer sufficient.”