Long-term mutual funds in Korea bring up to 1,000% cumulative returns

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While South Korea’s public funds are experiencing a downturn due to the popularity of exchange-traded funds (ETFs), long-term public funds like mutual funds have been garnering industry attention with cumulative returns of up to 1,000 percent since their inception, proving that long-term investments of 20 years or more in well-diversified public funds can produce excellent returns.

According to market data on Tuesday, the average cumulative return of long-term funds in Korea over the past 20 years stands at an impressive 269 percent.

Among these funds, the Mirae Asset Discovery Fund emerged as a leader with a cumulative return of 1,040 percent as of July 24 since its inception in 2001. The Shinhan Marathon Fund also delivered a 600 percent cumulative return since its establishment in 2002.

These funds are also considered iconic for each fund management company’s investment philosophy.

During the 2000s, Mirae Asset’s Discovery and Independence funds took the lead in the mutual fund frenzy in Korea. The Independence Fund, launched in 2001, attracted numerous investors and surpassed an initial target size of 100 billion won ($78.2 million) in just one year.

Similarly, Shinhan Asset Management has adhered to a consistent investment philosophy since its establishment in 1996, successfully operating value-oriented funds such as the Value High Dividend Fund and the Marathon Fund, earning a reputation as a value investment leader in the public fund market.

Another intriguing aspect is that many of the large-scale, long-term mutual funds primarily invest in stable high-dividend stocks. Dividend funds like the Shinhan Value High Dividend Fund and the Barings High Dividend Fund have achieved remarkable performances with returns of 732 percent and 603 percent, respectively. The Shinhan Value High Dividend Fund currently has a net asset size of approximately 1.1 trillion won.

However, concern rises as the initial asset size of long-term mutual funds has not seen significant growth and remains stagnant. This can be attributed to the emergence of popular ETFs, which offer lower fees and real-time access to investment targets, thereby impacting traditional mutual fund products.