By Lee Hyo-sik
Staff Reporter
South Korea tops the global ranking in the number of funds investing in stocks, bonds and other assets. But the size of their assets is far from the global standard. Analysts say that the domestic market is flooded with small-and medium-sized funds, calling on asset management firms to expand the volume of their investment funds to reduce operation costs and generate larger profits through the greater market clout.
According to the Korea Securities Research Institute (KSRI) Monday, asset managers and securities firms here manage a total of 9,896 investment funds as of the third quarter of 2008, the largest among 44 countries. It accounted for 14.2 percent of the world's total, down from 27 percent in 1998.
However, their combined assets under management reached $246.2 billion won, ranking 14th, accounting for little more than 1 percent of the globally managed funds. The average assets of local funds stood at $25 million, much smaller than the global average of $312 million.
The value of the funds accounted for 33 percent of gross domestic product, compared with the 45 percent global average.
A KSRI researcher Yoon Jong-mun said the nation's fund industry has remained uncompetitive, compared to those of other economies, because of the small size of each fund, and higher management and operating expenses.
``There are too many small-sized funds here and it has been difficult for managers to pay attention to all of them. To cut management costs and generate greater returns for investors, small funds should be consolidated into larger ones, which have a greater influence over the market,'' Yoon said.