By Park Hyong-ki
Staff Reporter
Investors have been reaping attractive returns from socially responsible investment (SRI) funds investing in shares of companies engaged in ethical business activities.
According to Zeroin, a fund evaluating firm, nine SRI funds with assets under management of over one billion won showed gains similar to those of stock funds at 45 percent over the past six months.
SRI companies include those devoted to developing alternative energy and eco-friendly products as well as mitigating the effects of global warming and water pollution. Funds generally avoid investing in companies with interest in alcohol, tobacco, chemistry or military technologies.
The top three SRI funds on the market, for instance, averaged gains of 48 percent for investors, higher than those of equity funds, Zeroin said.
Those funds from KDB Asset Management invest 70 percent of the total investments in undervalued companies conducting environmentally and socially responsible businesses. The remaining 30 percent are invested in blue chips.
Meanwhile, an SRI fund launched by Woori CS Asset Management last November only invests in stocks of entities that show potential in financing and operating welfare projects successfully after thorough evaluations.
Investors were able to reap gains of about 35 percent over six months from the fund.
Although SRI funds only account for 0.5 percent of the market for equity funds, experts expect such ethical funds to grow further on the back of investors' growing interest in socially active firms and increasing SRI fund products introduced by asset management and securities companies. Domestic stock funds reached over 120 trillion won in net assets this month.
SRI funds were first introduced to Korea in 2003. But it wasn't until after 2006 when retail investors became interested in such funds in line with the introduction of the Korea Corporate Governance Fund, or better known as ``Jang Ha-sung Fund,'' which aims to improve companies with weak corporate governance by actively investing in them.
Daishin Securities introduced a fund investing in overseas SRI funds early this year. It noted that sales of 100 U.S. companies active in socially responsible businesses average 30 to 40 percent higher than other enterprises.