[THE INVESTOR] Investors are favoring alternative vehicles such as exchange-traded funds and hedge funds over stock funds, according to industry data.

South Korea’s stock funds, excluding exchange-traded funds, have continued to record net outflows for nearly four weeks, losing more than 2 trillion won (US$1.82 billion), data shows.

Net redemptions totaled 2.23 trillion won for 26 consecutive trading days from July 29-Sept. 5 in the longest losing streak since 2013, when a total of 7.3 trillion won escaped stock funds for 47 trading sessions in a row.

Overseas stock funds, however, saw net outflows of only 277.8 billion won during the period.

Analysts attribute the trend to a profit-taking run from the KOSPI’s recent rally. Traders are not convinced that the bourse, currently stuck in a tight range below 2,100 points, will further rise amid uncertainties at home and abroad.

“One key reason behind the outflow in domestic stock funds is that investors are not confident that the KOSPI will keep going up,” said Kim Yong-koo of Hana Financial Investment.

He also cited the possibility of the US Federal Reserve raising the key interest rate within this year.

In sharp contrast to the waning popularity of stock funds, traders are increasingly turning to other investment vehicles including ETFs and hedge funds.

The net assets of ETFs here expanded to 23.7 trillion won as of Sept. 5, up 2.6 trillion won from the end of last year.

Hedge funds and real estate funds are also drawing more money as well. Local hedge funds’ assets under management came to 6.26 trillion won as of Sept. 5. Currently, 163 hedge funds are in operation here by 49 managing firms.

(theinvestor@heraldcorp.com)