Shinhan Asset Management "2025 Fund Market Keywords: US, TDF, Monthly Payout"

Shinhan Asset Management announced on the 17th that it has published the '2025 Fund Market Outlook' report.

The Fund Market Outlook is an annual forecast report published for the sixth consecutive year since 2019. Unlike existing research materials, it provides insights into changes and forecasts of the fund market from the perspective of asset management companies that operate funds and supply products. The report is composed of 2024 fund market trends, 2025 fund market outlook, and ESG investment trends.

Song Taeheon, Senior Deputy Head of Product Strategy Center at Shinhan Asset Management, said, "In 2024, both direct and indirect investments by individuals increased significantly, which created demand in differentiated areas between general public offering funds and exchange-traded funds (ETFs). Retail public offering funds led a reversal in net inflows for the first time in five years, driven by the formation of the ultra-short-term bond market, diversification of overseas bond strategies, and the resurgence of TDFs."

In 2024, individual investors led the high growth of ETFs. In particular, equity ETFs established themselves as a primary means for individual investors to bear risk, with the top net purchase types focusing on U.S. stocks such as the S&P 500, covered calls (overseas), and NASDAQ 100. Additionally, monthly dividend ETFs saw net inflows of 6.17 trillion KRW throughout the year, accounting for 36% of the total net purchases of 17.1 trillion KRW.

Furthermore, the key themes for the 2025 fund market were identified as the U.S., TDFs, monthly payout funds, and bonds. Next year is expected to enter a policy pivot phase due to a slowdown in inflation. The U.S. is forecasted to maintain solid growth and favorable fundamentals.

The TDF market saw significant capital inflows starting from the default option introduced in 2023. Along with outstanding performance compared to other retirement pension products, capital inflows more than doubled year-on-year, occurring both online and offline. This trend is expected to continue next year. Monthly dividend ETFs (income strategies) are also expected to remain effective in the volatile environment anticipated in the coming year.

However, investors who do not immediately need cash flow should consider investing in total return products that automatically reinvest cash flows. Lastly, overseas bond investments are expected to continue focusing on short maturities and high-yield credit investments. With the short-term interest rate differential between Korea and the U.S. maintained and ongoing uncertainty in the KRW-USD exchange rate, demand for short-term dollar bonds is expected to persist. Although the investment attractiveness of corporate bonds has declined due to a drop in yield levels, the relative investment appeal of high-yield bonds is expected to be maintained.

Regarding ESG investment, it was noted that "As of November 2024, 78% of KOSPI-listed companies have an ROE below 10%," adding, "Only a minority of companies currently demonstrate genuine shareholder value enhancement in value-up related indicators, and a high return on equity is a prerequisite for high valuation."

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