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Korean investors are putting more money into funds that invest in low-grade bonds amid low market interest rates, data showed Thursday.
Inflows to such funds amounted to 3.19 trillion won ($2.9 billion) as of end-December, just nine months after their market debut in early April last year, according to the data compiled by the Korea Financial Investment Association.
In March last year, the country’s regulator allowed local financial firms to sell a new type of high-yield fund, matched with tax benefits, in a policy effort to spur corporate financing.
The high-yield funds are required to have 30 percent of their portfolios comprised of speculative bonds rated “BBB+” or below. Given such components, they entail greater risks but offer higher returns.
In Korea, an investor can normally be levied up to 42 percent on financial income from mutual fund investments, but a revised law allows investors to pay less on their profits from investing in high-yield funds. (Yonhap)
Inflows to such funds amounted to 3.19 trillion won ($2.9 billion) as of end-December, just nine months after their market debut in early April last year, according to the data compiled by the Korea Financial Investment Association.
In March last year, the country’s regulator allowed local financial firms to sell a new type of high-yield fund, matched with tax benefits, in a policy effort to spur corporate financing.
The high-yield funds are required to have 30 percent of their portfolios comprised of speculative bonds rated “BBB+” or below. Given such components, they entail greater risks but offer higher returns.
In Korea, an investor can normally be levied up to 42 percent on financial income from mutual fund investments, but a revised law allows investors to pay less on their profits from investing in high-yield funds. (Yonhap)
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Articles by Korea Herald
