Park Hyeon-joo
Mirae Asset Founder

By Yoon Ja-young
Staff Reporter

Mirae Asset's ``Insight Fund,'' the best-selling investment vehicle that overheated the market last year, is making investors reflect over losses amid the global stock market collapse, although the firm said things will get better.

Launched in last October, the fund wrote a new chapter in the history of the indirect investment market here. It drew a record-high 4.7 trillion won shortly after its launch, despite signs of global stock market turmoil. The fund is testing the reputation of its founder Park Hyeon-joo.

It was introduced as the first global ``swing fund'' here, investing in securities, bonds, derivatives, or even other funds in any promising region around the world. Despite the over 3 percent service fees, higher than most other fund fees, investors flocked to Mirae Asset branches to subscribe to the fund. They were drawn by the reputation of the nation's top asset management firm, which has become the symbol of fund investment in Korea. Having around one third of the total equity fund market under its management, its influence on the stock market is tremendous.

With the ongoing paradigm shift from bank savings to fund investment, equity funds investing in the local stock market drew over 100 billion won inflow of money even on Tuesday when the main index KOSPI fell over 4.4 percent. A fund run, or an exodus of money from the fund market, is unlikely, according to analysts.

The performance of the ``Insight Fund'' so far, however, has been disappointing. ``It has recorded around an 18 percent investment loss so far this year, which is worse than the average of other overseas equity funds, or the benchmark MSCI World Index,'' said Hur Jin-young, an analyst at fund evaluator Zeroin. The fund has recorded an over 20 percent investment loss since its launch three months ago.

Despite the global stock market turmoil, some overseas hedge funds could make up for the loss by buying government bond futures for hedging. Investors in the ``Insight Fund'' wonder why the fund had to just focus on the loss.

The fund seems to be putting too much emphasis on China. It has 29.8 percent of its portfolio invested in China and 15.6 percent in Hong Kong. It means nearly half of the investment is at the mercy of the China market. Mirae Asset said the fund invests 75 percent in emerging market stocks, including 17.4 percent in Russia and 13.9 percent in Brazil.

It is also investing heavily in stocks. The fund has 91.01 percent of its portfolio in stocks and 8.99 percent in liquidity. Hence, it was fully vulnerable to loss once markets turned bearish.

Mirae Asset said it was not going to change its portfolio in the short term, and stressed that investors should know that they are not like hedge funds.

``We invest only in the very best companies around the world. We're long-term investors who maintain companies in our portfolio for a considerable time,'' said a spokesperson of Mirae Asset. He said the ``Insight Fund'' is different from other global asset funds as well. ``They have a fixed ratio of bonds in portfolios, higher than ours. Though they performed better in the unusual market collapse, our fund has a higher investment return target.''

He also stressed that the fund is recording less loss than China funds or BRICs funds. Mirae Asset focused on marketing the ``Insight Fund'' instead of its China funds last fall, after deciding the latter were overheated. A fund analyst said Mirae Asset seems to have launched the fund as a means of diversification, as its lineup has mostly targeted emerging market funds such as those in China. People were looking for an alternative amid growing concern over a bubble in the Chinese market, and the fund was launched at the right time.

Mirae Asset said it was likely to maintain its portfolio, investing a considerable part in China, as it still has faith in the fundamentals of the Chinese economy. ``The fundamentals of the Chinese economy are good. With the interest rate cut and inflow of oil money and other sovereign funds, the stock market will recover,'' the spokesperson said.

China's Internet company Baidu, Russia's Gazprom and Mobile TeleSystems, Hong Kong Stock Exchange, and ABB, a multinational power equipment company, are among the top five items in the fund's portfolio.

chizpizza@koreatimes.co.kr