Which Wonder Fund Shows Promising Results in 2020? Active Stocks and TDF

[Asia Economy Reporter Song Hwajeong] This year, interest in active equity funds, which have been sluggish so far, is expected to increase. Additionally, as interest in retirement asset management grows, Target Date Funds (TDF) are also projected to be promising.

According to Yuanta Securities, since 2017, among domestic equity types, there has been a notable inflow of funds into index-type funds. Kim Hoojung, a researcher at Yuanta Securities, explained, "Globally, the expansion of the Exchange-Traded Fund (ETF) market is a common phenomenon. ETFs are gaining attention from investors due to advantages such as low fees and trading convenience. As ETFs are used as underlying assets in EMP (ETF Managed Portfolio) and TDFs, the scale of ETF management worldwide is rapidly growing."

However, despite the many advantages of ETFs, there is an opinion that index-type funds cannot completely replace active-type funds. Researcher Kim said, "The basic investment strategy of index-type funds is to replicate an index, whereas active-type funds seek excess returns compared to the market through the capabilities of asset managers and management companies. The ability to discover high-quality stocks or specialize in specific sectors or strategies is a strength of active funds."

Although domestic equity active-type funds have experienced outflows for eight consecutive years, the scale of outflows is gradually decreasing. Researcher Kim forecasted, "Last year, the domestic equity market had a difficult period due to the US-China trade dispute and export sluggishness, but this year, as emerging countries show signs of recovery, the domestic equity market is expected to show signs of change."

Major global investment banks also view the domestic equity market positively this year. BNP Paribas and Morgan Stanley have upgraded their investment opinions to 'overweight,' and Credit Suisse and Nomura Securities expect significant profit growth for Korean listed companies.

In the global fund market, the proportion of Korea within emerging market funds (average value of funds) increased from 7.7% at the end of July last year to 8.4% in November. Researcher Kim stated, "As the Chinese stock market grows, the relatively declining Korean investment proportion has shown a meaningful increasing trend. Within emerging market funds, the movement of Korea's proportion and the KOSPI have moved similarly. If the domestic stock market shows an upward trend, the performance of domestic equity active-type funds, which have been overlooked, will improve."

With growing interest in retirement asset management, inflows into TDFs are also rapidly increasing. Researcher Kim projected, "If new systems related to retirement pensions, such as fund-type retirement pensions and default options, are introduced in the future, the asset size of TDFs will grow even faster."

This content was produced with the assistance of AI translation services.