Has Fractional Investment Had Its Day? Only 14 Offerings This Year as Investors Turn Away

Although the institutional incorporation of fractional investment is approaching, the issuance market is cooling. Some are even raising concerns that fractional investment may have become an outdated investment option.
According to the financial investment industry on the 2nd, the Financial Services Commission (FSC) is expected to review this month applications for full approval from preliminary approval holders for the fractional investment over-the-counter trading brokerage business. Once the process is completed, the preliminary approval holders will be able to open exchanges this year as well. The Korea Exchange (KRX) is also scheduled to launch its new securities market on November 16. Fractional investment products are the leading example of new securities, and once the market opens, they will be tradable within the institutional framework.
Fractional investment involves dividing high-priced physical assets or property rights into small ownership units, allowing multiple people to invest jointly and share the resulting returns. It enables the securitization and trading of assets that have been difficult to trade in conventional securities markets, including not only artworks and real estate but also music copyrights and livestock farming.
An industry official said, “Fractional investment operators will have more options in choosing whether to issue products on or off the exchange. With the implementation of the tokenized securities system next year, the market for securitizing a wide range of tangible and intangible assets, including real estate, artworks and content, is also expected to gradually expand.”
However, South Korea’s fractional investment issuance market is facing a chill. According to KIWOOM Securities, the number of fractional investment offerings peaked at 60 in 2024 before beginning to decline to 50 last year. As of September 2 this year, the figure had shrunk to 14. The total offering amount also plunged from 27.22 billion won in 2024 to 13.25 billion won last year and 4.87 billion won this year.
In the case of real estate fractional investment, which had the largest scale, not a single offering was issued this year. Platform operators are even shutting down their services. Kasa Korea ended its service last month after selling all of its underlying assets, while FUNBLE announced the end of its service in April and is pursuing the sale of its remaining underlying assets. Fractional investment in artworks conducted four subscription offerings this year, but three of them failed even to reach their target public offering amounts. Livestock fractional investment continues to see subscriptions and offerings, but the average amount issued per offering is less than 400 million won.
Industry officials expressed concern that fractional investment is losing the interest of investors.
A securities industry official said, “I think the main issue is not so much a lack of regulation as the fact that fractional investment has fallen out of investors’ interest. Its lower returns than domestic and overseas stock markets have also pushed it down investors’ preference list.”
Some argue that a leading product must emerge in the fractional investment market as well. Shim Subin, a researcher at KIWOOM Securities, explained, “Interest in fractional investment rose because songs such as ‘Rollin’’ made a comeback, driving up prices in secondary trading, while Musicow US delivered high returns. The biggest question is how attractive these assets can be to investors.” She added, “The level of eligibility requirements for underlying assets set out in subordinate regulations and guidelines will be a key variable determining the diversity of products and growth potential of the early market. If differentiated investment targets can be newly incorporated, there is also potential for this to lead to the formation of a new investment product market.”
[email protected] Han Young-jun Reporter