ETF turnover jumps 14.8 % in March

South Korea's exchange-traded funds (ETFs) market saw its daily turnover jump 14.8 percent on-month in March as investors moved to profitable destinations amid low interest rates, data showed Monday.

The average daily trading volume of ETFs in South Korea came to 886.1 billion won (US$ 783.8 million) in March, compared to 771.9 billion won tallied a month earlier, the bourse operator Korea Exchange (KRX) data showed.

It accounted for 23.1 percent of the daily turnover on the benchmark Korea Composite Stock Price Index (KOSPI) market, up 11.8 percentage points from 11.3 percent tallied in end-2012, the data added.

An ETF refers to an investment fund traded on stock exchanges and represents a basket of stocks that reflect an index. It provides retail investors and institutions with a more liquid and risk-hedging tool.

Retail investors took up 32.8 percent of the trading volume, trailed by foreigners with 29.1 percent and institutions with 22 percent.

Market watchers said investors' growing appetite for ETFs came as they sought after high-yield investment destinations amid the trend of low growth and interest rates.

South Korea's central bank froze the key interest rate for the sixth straight month on Thursday, holding the benchmark seven-day repo rate unchanged at 2.75 percent.

Low commission fees boast by ETF instruments also added to the rising demand, market watchers said. Meanwhile, the net asset value of the local ETFs jumped 43.4 percent on-year since 2008, growing at a faster pace compared to global peers. The market size of the global ETF market advanced 17.8 percent on-year over the cited period.

Philippines News agency