South Korean financial firms’ assets under management hit a record high of 950 trillion won ($880.9 billion) in 2017, up 4.7 percent from the previous year, data showed Sunday.

The hike in the volume of professionally managed assets was driven by a surge in private funds’ increase in property investment, as well as increased capital for discretionary investment in domestic shares and overseas bonds, according to preliminary data from the Financial Supervisory Service.

Despite the record, the local financial watchdog warned of looming external risks, including US rate hikes, which might undermine capital liquidity, in a release Sunday.

It also vowed stronger oversight of financial soundness and the risk management capability of asset management firms. The FSS pointed to deficits that 46 percent of local asset managers made last year.

Assets under management refer to the total market value of funds made up of clients’ money invested in various asset classes, including equities, bonds, derivatives, money market funds, real estate and special assets.

The type of funds are divided into mutual funds -- private and public -- and funds in discretionary wrap accounts, requiring higher minimum investment.

Of the total, assets managed under private mutual funds -- pools of money collected from less than 50 retail clients -- jumped 14.4 percent on-year to 286 trillion won, while private funds’ investments in real estate assets shot up 30.2 percent to 57.8 trillion won.

Assets under discretionary mandate reached 452 trillion won, up 3.2 percent on-year. Of the total, domestic equity assets under discretionary contracts rose 9.4 percent to 87.4 trillion won, while bond assets under such contracts jumped 37.2 percent to 38 trillion won.

Meanwhile, assets under public mutual funds -- made up of money from at least 50 clients -- fell 4.1 percent on-year to 211 trillion won, in part due to a drop in assets under money market funds by 16.7 percent.

As of the end of 2017, Korea was home to 215 asset management firms, up 50 compared to a year prior. Those dedicated to the asset management industry rose 14.6 percent to reach 7,337. The firms’ combined net profit came to 627.4 billion won, up 3.5 percent from the previous year.

By Son Ji-hyoung 
(consnow@heraldcorp.com)