Posted January. 30, 2009 07:10,
Only 40 percent of domestic investors willing to invest in financial packages are aggressive enough that financial companies can pitch them equity funds, a survey said yesterday.
Of financial investment packages, those having no or low risk such as cash management accounts, money market funds and high-grade corporate bonds are the most popular among individual investors (80 percent).
A survey of 1,000 individual investors jointly conducted by The Dong-A Ibo, Good Morning Shinhan Securities and Dongseo Research found that individual investors significantly lost investment confidence after suffering big losses from the global financial crisis.
The survey was designed based on a standard investment solicitation rule by the Korea Securities Dealers Association. Those who put their money solely in installment savings or deposit accounts were excluded from the poll.
When the Capital Market Consolidation Act takes effect Wednesday next week, financial institutions must suggest investment packages that fit each investors inclination based on the standard rule classifying an individual investor into one of five categories.
After incorporating all investment-related factors such as the amount and period of investment and investor experience, knowledge, income and willingness, the survey found that 0.2 percent preferred safety; 9.5 percent sought safety; 49.3 percent were neutral to risk; 36.3 percent were active in investment; and 4.7 percent sought aggressive investment.
The poll was the first of its kind to systemically identify the propensity of domestic investors to investment since equity funds became universal in the country.
Investors neutral to risk said they are fully aware of the risk of their investment and willing to take risk to a certain degree. So they were recommended mixed-type funds and capital-guaranteed equity linked securities, including zero-risk packages. Those classified as active or aggressive investors were drawn to more risky packages like equity funds.
Most investors (53 percent) preferred government bonds, cash management accounts and money market funds that have no risk, followed by low-risk packages such as financial debentures, bond-type funds and capital-guaranteed equity linked securities (22.9 percent).
In addition, 6.7 percent sought mid-level risk packages such as mixed-type funds; 11.2 percent high-level risk packages including capital non-guaranteed equity linked securities and derivative investment funds; and 6.2 percent extremely risky funds such as equity-linked warrant securities and speculation-grade bonds.