Raw Material Funds Attracted 2.4 Trillion Won in One Week

Unprecedented Oil Price Movements Including First Ever Negative International Oil Prices... Betting on Rise
Investment Risks from Short-Term Outlook Only... Caution Needed in Highly Volatile Market Conditions

[Asia Economy Reporter Koo Eun-mo] International oil prices have experienced an unprecedented plunge, and with gold prices soaring, more than 2.4 trillion KRW has flowed into commodity funds over the past week.

According to fund rating agency FnGuide on the 24th, a total of 2.4414 trillion KRW was net inflowed into 44 commodity funds with assets under management of over 1 billion KRW as of the previous day. Commodity funds saw an increase of 557.5 billion KRW in assets under management in just one day. Over the past month, a net inflow of 4.9532 trillion KRW was recorded.

During this period, funds flowed mainly into exchange-traded funds (ETFs). KODEX WTI Oil Futures (H) attracted 1.988 trillion KRW, while TIGER Oil Futures Enhanced (H) and KBSTAR US S&P Oil Production Companies (Synthetic H) received 235 billion KRW and 65 billion KRW respectively. Among general funds, Samsung WTI Oil Special Asset Investment Trust saw its assets increase by 117.3 billion KRW, and BlackRock World Energy Securities Investment Trust also attracted 10 billion KRW.

The recent sharp drop in international oil prices has led investors to enter the market based on the perception of a bottom and expectations of future price increases. Jung Sung-in, head of the ETF Strategy Team at Korea Investment Management, explained, "The stock market has partially rebounded this month, creating an ambiguous situation for new investments. In this context, as oil prices fell, a rapid inflow of funds occurred driven by vague expectations that prices will eventually rise." He added that as the stock market declined last month, waiting funds increased sharply, and investors took advantage of the drop in international oil prices to invest heavily in commodity-related products.

International oil prices have recently shown unprecedented movements. West Texas Intermediate (WTI), which traded around $50-$60 per barrel last year, sharply dropped to around $20 per barrel last month, and on the 20th (local time), May delivery futures expired at -$37.63 per barrel. This was the first time in history that international oil prices fell into negative territory. On the 23rd, WTI closed at $16.50 per barrel, up 19.7% ($2.72) on the New York Mercantile Exchange (NYMEX).

Fund returns varied depending on their main investment targets. Funds primarily investing in oil recorded losses, while those investing in gold posted gains. KODEX WTI Oil Futures (H) suffered losses exceeding 50% (-58.1%), Samsung WTI Oil Special Asset Investment Trust lost 43.7%, TIGER Oil Futures Enhanced (H) dropped 26.9%, and Mirae Asset Rogers Commodity Index Special Asset Investment Trust lost 17.0%.

On the other hand, gold-investing funds such as BlackRock World Gold Securities Investment Trust and IBK Gold Mining Securities Investment Trust recorded returns of 9.15% and 1.37%, respectively. Unlike oil, gold prices have continued to soar due to ongoing safe-haven demand. On the previous day, gold prices closed at $1,745.40, up 0.4% ($7.10) from the previous trading day on the New York Commodity Exchange, maintaining the $1,700 level.

While incorporating commodities into asset management portfolios is a necessary strategy, investing based solely on short-term forecasts in highly volatile markets like these is risky. Especially, although ETFs and exchange-traded notes (ETNs) offer advantages in accessibility and liquidity, caution is needed due to their volatility.

An asset management company official advised, "Commodities help preserve real value and protect asset value during inflation, so including a certain portion in portfolios is a good strategy," but also noted, "Considering recent issues such as the divergence rate in the oil market, investing in general funds rather than ETFs is not a bad option."

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