Some children's funds in South Korea have delivered returns of more than 100%, yet investor interest in the products has faded. Assets in the children's fund market have shrunk by 175.3 billion won over the past five years, as demand for investing on behalf of children has moved to exchange-traded funds and direct stock purchases.
Assets under management in children's funds totaled 324.2 billion won as of the 22nd, according to financial data provider FnGuide on the 29th. That marks a drop of 175.3 billion won, or 35.1%, from 499.5 billion won in January 2021. The total fell each year, from 436.5 billion won in 2022 to 435.9 billion won in 2023, 416.3 billion won in 2024 and 388.5 billion won last year. The number of funds in operation, defined as those with at least 1 billion won in assets, also declined to 21 from 22 in 2021.
Performance has not been the problem. Twelve of the 21 children's funds, or 57%, returned more than 100% over the past year. The best performer was the Kiwoom Junior Installment Securities Feeder Investment Trust 1 [Equity] C1, with a return of 127.71%. It was followed by the Hana Family Love Jjang Installment Securities Feeder Investment Trust (K-1) [Equity] Class C5 at 116.63% and the NH-Amundi I Love Child Installment Securities Investment Trust 1 [Equity] at 114%.
Funds with heavy exposure to domestic stocks dominated the top of the rankings. All three top performers are domestic active equity general funds. As the local stock market climbed sharply, products with large holdings in chipmakers such as Samsung Electronics and SK hynix benefited most from the rally. The Kiwoom Junior fund holds Samsung Electronics at 28.93% and SK hynix at 22.8%, its two largest positions.
Even the best-performing funds lost assets. Assets in the Kiwoom Junior Installment Securities Feeder Investment Trust 1 [Equity] fell by 3.44 billion won over the past year. Over the same period, the NH-Amundi I Love Child fund shed 3.76 billion won and the Hana Family Love Jjang fund 320 million won.
The contraction despite solid returns reflects the diversification of investment options, above all the rapid growth of the ETF market. Net assets of domestic ETFs stood at 458.7424 trillion won as of the 28th, up 160.4963 trillion won from the start of the year, according to the Korea Securities Depository's SEIBro system. An executive at a financial investment firm said parents increasingly prefer ETFs or individual stocks that let them pick specific markets or sectors themselves, rather than signing up for a dedicated children's fund.
Trading habits have also changed. Accounts held in the names of minors now actively trade not only large-cap blue chips such as Samsung Electronics and SK hynix but also major index ETFs including TIGER U.S. S&P500 and KODEX 200. An official at a large domestic brokerage said the ability to buy and sell in real time like stocks, and to spread money across domestic and overseas indexes or specific industries with less than 100,000 won, has drawn interest from parents who favor long-term investing.
