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Gold funds shine on flight to safety

Gold-related funds in South Korea have posted stellar returns over the past month, data showed Thursday, as geopolitical risks chilled the stock market and stoked investors' flight to safety.

Those funds posted an average return of 3.49 percent in the month to Wednesday, the top performer among local investment funds worth 1 billion won ($880,000) or more, according to the data from financial information provider FnGuide.

Comparable yields were 2.31 percent for exchange traded funds focused on overseas stocks, 2.02 percent for ETFs investing in other assets, 1.97 percent for commodity stock funds and 1.12 percent for natural resources funds.

(Yonhap)
(Yonhap)

The outstanding performance of gold funds came as the local stock market took a hit from high geopolitical risks on the Korean Peninsula sparked by a standoff between the United States and North Korea over Pyongyang's nuclear and missile programs.

Since hitting a record high of 2,451.53 on July 24, the benchmark Korea Composite Stock Price Index had been on the skids on foreign investors' massive profit-taking. In recent sessions, it regained some ground, finishing up 0.05 percent at 2,366.40 on Wednesday.

"Geopolitical risks on the Korean Peninsula affected equity markets across the globe, whetting investors' appetite for risk-off assets," said Oh Eun-soo, an analyst at KB Securities. "Gold funds fared better on a spike in gold prices."

Meanwhile, the stock market's correction prompted investors to put their money into bond funds, with ultra short-term bond funds attracting 546.8 billion won during the one-month period.

"Amid the stock market's correction, a large amount of floating funds has flown into ultra short-term bond funds as many investors are straddling the fence," Oh said. (Yonhap)
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