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Korea’s sustainable funds see massive inflows in Q3

NH-Amundi's newly launched product contributed around 36% of the inflows, according to Morningstar.

Editor’s note: This article was first published on ESG Clarity Asia.

Sustainable funds sold in Korea saw huge net inflows of KWR 209.4bn ($190m) during the third quarter, increasing the AUM of the market by 47% compared to the previous quarter, according to a report by Morningstar.

The sustainable domestic large-cap equity category led the inflows of nearly KWR 200bn, with the Midas SRI Equity and NH-Amundi Century Enterprise Green Korea Equity funds contributing 54% and 36% of the inflows, respectively.

The report noted that the NH-Amundi fund was just launched in September. It focuses on a green theme and is expected to invest in 5G, secondary batteries, hydrogen and electric vehicles, and wind power-related companies that are expected to benefit from the government’s New Deal plan.

Under the New Deal plan, the government will invest KRW 114trn in industries supporting technology infrastructure, such as 5G and artificial intelligence, and green projects by 2025.

The inflows toward sustainable domestic large-cap equity funds compare with the net outflows of KWR 1.24trn from the overall Korea large-cap equity fund category, the report noted.

“Sustainability investment has recently emerged as a trend in Korea as investors focus on sectors and companies that are set to benefit the government’s New Deal policy, which is viewed as the centrepiece to promote sustainable investments,” the report said.

“We expect growing investor appetite for sustainable funds in Korea, driven by the government initiatives to promote ESG,” Andy Seunghye Jung, director of manager research in Korea, added.

Net flows of sustainable funds in Korea

Data only includes Korea-domiciled open-end funds, excluding exchange-traded funds, money market funds and fund of funds.

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