Funds eying stock and bond offerings drawing back investment in Korea

[Provided by Maekyung Media Group]

Funds placed for initial public offerings in South Korea are returning after successful market debuts of small and medium players.

Mutual funds focused on bond and stock offerings have been yielding return rates of around 3 percent or higher lately, with a mutual fund operated by Plus Asset Management recording 4.05 percent return rate, according to local financial data tracker FnGuide on Monday.

The IPO funds are drawing back around 4 trillion won ($2.8 billion) after losing over 2 trillion won earlier in the year amid stock market slump. Investment thinned on the back of debut disappointments and cancellation of promising IPO candidates.

Mutual funds investing in small firms heading to the secondary Kosdaq market and hybrid funds designed to invest in bonds as well as IPO shares are drawing investors with promise of reasonable returns.

Such hybrid bonds in general invest more than a half of pooled capital in government bonds and high rated corporate debts for steady income while investing around 30 percent of the capital in IPO shares for extra profits.

Asset managers are also actively operating funds for investment in SMEs listed in Konex and bonds rated BBB+ or below for the opportunity to gain priority access in IPO shares.

By Kim Geum-yi and Cho Jeehyun