By Yoon Ja-young
Staff Reporter
Mirae Asset Investment Management's dinosaur-like ``Insight Fund'' swallowed over 3 trillion won from investors in just two weeks after it started selling. While investors seem to be drawn by the reputation of the nation's top asset management firm, analysts are expressing concerns over the blind investment of which performance has yet to be proven.
The fund, which started selling on Oct. 22, began investing from Nov. 1. It is still seeing over 300 billion won inflow of money each day, while other equity funds recently saw an outflow of money for the first time since May.
Analysts say people are withdrawing money from these funds to switch to the ``Insight Fund.''
The nation's largest mutual fund firm is now sitting on a total of 70 trillion won in assets under management and nearly three quarters of the assets came from retail investors.
Analysts say investors are rushing to the fund, mostly without a sufficient check-up of its characteristics. They were just betting on the reputation of Mirae Asset, they said.
``It has shown amazing performance last year, and built up trust. Investors were definitely drawn by the name,'' said Hur Jin-young, an analyst at fund evaluator Zeroin. Mirae became the symbol of fund investment in Korea, with its asset management arm taking around one third of the total equity fund market.
The timing was also perfect. ``It was about the right time. People needed an alternative amid growing concern over bubble in the Chinese market,'' said Park Hyun-chul, a fund analyst at Meritz Securities.
However, analysts show concern that investors are being too hasty to the point of recklessness. It is the first global ``swing fund'' introduced here, investing in securities, bonds, derivatives, or even other funds in any promising region.
It says it will switch to promising investment tools depending on the market condition each time, but it doesn't tell investors exactly what that would be. Investors, however, don't seem to mind as long as they can invest in the fund.
``It's a totally new type of investment product here. Since we don't know where they are investing, it's difficult to give an outlook,'' Hur said. She said it needs at least six months to evaluate the management.
Meritz Securities' Park said investors seem to be misunderstanding the ``Insight Fund.'' Contrary to their investors' general belief that it would seek very high investment returns like hedge funds, it's more like a global fund that seeks a moderate return, according to Park.
He said Mirae Asset seems to have launched the fund as a means of diversification. ``Unlike other major firms, Mirae Asset's funds are mostly aggressive. Their lineup has few funds focusing on value stocks, and their overseas funds are also mostly emerging markets like China.''
He said ``Insight Fund'' isn't likely to invest like hedge funds, though it's described as such. ``It is impossible for the fund to put all assets in a certain investment tool, in a certain region. It would be more of a diversification tool rather than the one seeking high investment return.'' Mirae Asset also said it benchmarks Morgan Stanley Capital International (MSCI) World Index.
Other managers quip that it has yet to be proven how insightful the ``Insight Fund'' will be. At the same time, the fees are higher than those requested by other funds.
An investor has to pay more than 3 percent of the invested money in fees, while most other fund fees go well below 3 percent.
A Mirae Asset official says that its high fees reflect higher costs in research and other operating costs. But analysts advise that investors should thoroughly check fees and other terms before buying into the fund.
The ``Insight Fund'' boom has shown the significance of Mirae Asset in the Korean financial market. Exercising a major influence over the stock market, it has become one of the new benchmarks for investment here.
The commissions from funds helped it record an earning surprise in the second quarter, and its market cap surpassed Samsung Securities last Friday.
Past performances, however, are not a guarantee of the future. ``It is true that asset management firms take special care of their major funds,'' Hur said. ``However, it's only a start. They have just started management. Since they can invest in a wider scope, the investment return could be very different depending on the fund manager and external variables.''
A stock broker at Goodmorning Shinhan Securities said that investors' rush to a specific fund is ``a bit abnormal'' and could trigger some negative side-effects.
``It's unclear where the fund will invest its money. We should keep in mind that high returns are mostly associated with high risks. And a too bloated fund tends to perform poorly,'' the dealer said.