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| gettyimagesbank |
The sales of publicly traded funds have been on a sharp rise over the past two months, as an increasing number of people turned to safer investments amid the fallout from the "irresponsible sales" of high-yield, high-risk derivative financial products, data showed Thursday.
The derivative-linked funds (DLF), one among many products sold and managed by private equity funds (PEFs), are structured to track the performance of underlying assets such as interest rates and government-issued bond yields.
Their returns are determined by the movements of those assets.
According to the Financial Supervisory Service (FSS), of 795 billion won ($661 million) worth of DLF products sold by Woori Bank and KEB Hana Bank, 66.9 billion won was lost as of Sept. 25.
Worse yet, 351.3 billion won is expected to be lost, as the products' maturity is still to come, it added.
Data from Korea Fund Ratings showed Korea's four leading commercial banks ― Shinhan, KB Kookmin, Woori and KEB Hana ― sold a combined 55.6 trillion won in publicly traded funds in September, up 927 billion won from the month before.
Of them, Woori sold 13.7 trillion won, up 419 billion won from a month earlier, while KEB Hana sold 13 trillion won, 275 billion won more than the month before.
This is in stark contrast to the sales of high-risk products sold by PEFs, which plunged to 28.5 trillion won in August, down 589 billion won from the month before.
Both Woori and KEB Hana saw such products' sales drop in August.
For Woori, the figure was 6.9 trillion won in August, down 574 billion won from July.
KEB Hana's figure in the same period was 3.6 trillion won, down 195 billion won from the month before.
The notable turn against high-risk products resulted from customers making informed decisions with far greater concerns about possible losses, according to an industry official.
"Ever since the DLF controversy made headlines, customers are more conscious about whether their initial investments would be protected rather than how high the yields would be," a sales official at a Seoul-based bank said on condition of anonymity.
"We are increasingly becoming disinclined to recommend financial products with an obviously greater risk to customers who now worry more about losing money that making profit."
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