"The stock market is on fire, but investors want more"...Bond and parking-type ETF inflows plunge

[Financial News] As the Korea Composite Stock Price Index (KOSPI Index) continues to hit record highs, investors have been pulling large amounts of money out of conservative exchange-traded fund (ETF) products such as parking-type and bond-type funds and rotating into products that track the KOSDAQ index. This shift is being interpreted as a rapid spread of risk-on sentiment, driven by expectations for KOSDAQ activation policies and other structural changes.
According to Koscom Corporation's ETF Check data on the 1st, six of the 10 exchange-traded funds with the largest net outflows over the past month (January 27 to February 26) were parking-type or bond-type products. Three parking-type products and three bond-type products ranked among the top outflow names.
Mirae Asset TIGER Money Market Active ETF, a parking-type product, ranked second with net outflows of 520 billion won. KODEX CD Rate Active (SYNTH) ETF saw 459.8 billion won leave, while RISE Money Market Active ETF recorded outflows of 191.2 billion won, placing them third and seventh, respectively.
Parking-type ETFs take their name from the idea of "parking" cash temporarily, and are designed for short-term cash management, much like parking money for a brief period and then withdrawing it. They offer greater liquidity and convenience than deposits, and because interest accrues even for just one day, they tend to attract strong inflows when market uncertainty is high.
Significant outflows were also concentrated in bond-type products, which are generally considered to provide relatively stable returns. TIGER December Auto-Renewal Financial Bonds (AA- and above) Active ETF ranked fourth with net outflows of 200.9 billion won. SAMSUNG KODEX 30-Years Treasury Bond Active ETF and ACE U.S. 30-Year Treasury Bond Active (Hedged) recorded outflows of 196.3 billion won and 170.5 billion won, ranking fifth and tenth, respectively.
Market participants appear to be turning away from conservative ETFs as the domestic stock market experiences a red-hot rally. In fact, money exiting conservative ETFs has flowed into products that bet on further index gains. Investors have especially concentrated on the KOSDAQ market, where the uptrend has been relatively slower.
The ETF with the largest net inflows over the past month was Samsung KODEX KOSDAQ 150 ETF, which attracted 5.2664 trillion won. KODEX KOSDAQ 150 Leverage ETF (2.0708 trillion won) and TIGER KOSDAQ 150 ETF (1.6618 trillion won) followed, putting KOSDAQ index-tracking products in the top three spots. KODEX 200 ETF, which tracks the KOSPI Index, ranked fourth with net inflows of 1.3009 trillion won.
Kim In-sik, a researcher at IBK Securities, said, "The growing interest in the KOSDAQ market this year is clearly visible in the actual fund flow data," adding, "A combination of factors is at work, including fatigue after achieving KOSPI 5000, the ruling party's target of Kosdaq 3000 points, and expectations that the Ministry of Planning and Budget will increase the KOSDAQ weighting in its fund management evaluation benchmarks."
He continued, "Along with the government's strong commitment to revitalizing KOSDAQ, the announcement of delisting reforms aimed at removing insolvent companies has further raised expectations for structural improvements in the market," and added, "Beyond a short-term rotational trade, policy and institutional changes are unfolding simultaneously, leading to an overall improvement in sentiment across the KOSDAQ market."
Kim Jong-min of Samsung Securities predicted, "Whenever risks come to the fore, investors are more likely to turn them to their advantage and use them as opportunities for rotational trading within the Korean stock market."
jisseo@fnnews.com Seo Min-ji Reporter