Tips for Successful Fund Investment

Experts create fund portfolios by age bracket on the assumption that those in their 30s are active investors, while those in their 40s and 50s are moderate and conservative investors, respectively. They stress, “The underlying principle is that the purpose of investment is to form property for 30-somethings, to manage risk for 40-somethings, and to preserve property for 50-somethings.”

Target return: higher than market performance-

Lee Kye-woong, a team leader at Good Morning Shinhan Securities, said, “As you are the most active in life when you are in the 30s, you may want to target returns higher than market performance when investing in your 30s, even if you have to take high risks.”

Cho Wan-je, a fund analyst at Samsung Securities, said, “You need to raise your target return by forming a portfolio which actively pursues returns.”

Accordingly, the fund portfolios for 30-somethings are heavily geared to aggressively managed equity funds. The ratio of domestic funds and overseas funds is five to five or six to four. Domestic funds are diversified into growth-oriented and value-oriented, decreasing risk factors.

Overseas funds are also diversified into equity and alternative funds, and into various countries, including China, India, and Latin America.

Kim Kyoon, a team leader at Korea Investment, offers allotting investment by 20 percent to five funds investing in equity markets in Korea, China, India, Eastern Europe, and BRICs countries.

Portfolio should be adjusted according to situation-

Experts cite “promising market prospects” as the criterion for choosing which fund to invest in. They predicted that emerging markets, including Korea and Asian countries, are more promising than advanced countries.

Jin Mi-kyung, director of Wealth Care Center at Daehan Investment and Securities, said, “I would recommend reducing the proportion of your investment into the U.S. and Japanese markets, as the credit crunch caused by the sub-prime meltdown in the U.S. could spill over into the real economy.”

Experts also added that investors “should adjust their investment strategies according to market changes.”

Park Hyun-chul, fund analyst at Meritz Securities, said, “As funds are long-term investment vehicles, you need to adjust your investment portfolio at least once every six months.”

Kim also said, “Even if you are investing in installment funds, you need to adjust one third of your entire portfolio once a year.”

swon@donga.com