Korean retail investors favored exchange-traded funds (ETFs) over individual stocks this year, with net purchases of ETFs reaching 30.6 trillion won ($21.3 billion) in the first 11 months of 2024, according to a report by Shinhan Asset Management.
The report titled "2026 Fund Market Outlook," released Tuesday, showed retail investors also net purchased 29.5 trillion won worth of bonds during the same period, while net selling 11.6 trillion won in stocks.
Shinhan Asset Management said the data points to a structural shift in the investment market, with retail investors increasingly turning to indirect investment vehicles and allocating assets primarily through ETFs.
Net assets of public equity funds grew to 334 trillion won, benefiting from a combination of rising stock prices and capital inflows. Private equity fund net assets increased to 754 trillion won.
"ETF net assets surged by 113 trillion won this year to reach 286 trillion won, demonstrating explosive growth," the report said. "ETFs have become the most important investment vehicle for retail investors seeking exposure to risk assets."
The rally in domestic and overseas stock markets this year resulted in stronger performance for funds with higher exposure to risk assets such as equities. Domestic equity funds posted average returns exceeding 70 percent, while commodity funds delivered returns of 44.8 percent. Overseas equity funds also generated double-digit returns of 17.2 percent. Equities are considered relatively high-risk assets compared to government bonds, gold, and investment-grade corporate bonds.
"The 2025 fund market saw steady growth in public funds, driven mainly by bond funds and pension assets," said Song Tae-hun, head of the SDGs Strategy Team at Shinhan Asset Management. "ETFs attracted substantial capital inflows, particularly in overseas and domestic equity categories, establishing themselves as the core investment vehicle for retail investors and driving overall growth in the fund industry."
