South Korean investors shift to overseas ETFs as Bank of Korea resumes gold investment

South Korean financial markets are seeing a significant shift in capital allocation. Domestic ETF assets recently experienced a net outflow of 715 billion won, while overseas asset ETFs saw an inflow of 323 billion won. This trend reflects a growing preference among individual investors for US markets, with net purchases of US stocks reaching 4.6 billion dollars last month.

Korea Investment Management (KIM) is positioned to potentially regain its position as the third-largest ETF provider in Korea, currently trailing KB Asset Management. KIM holds a strong lineup of overseas-focused products, with approximately 63% of its 110 ETFs targeting international assets, including S&P 500 and Nasdaq 100 trackers.

In a separate move regarding national reserves, the Bank of Korea has resumed gold investment for the first time in 13 years. In the second quarter, the central bank invested approximately 250 million dollars (350 billion won) into the SPDR Gold Trust (GLD) ETF. While the bank continues to hold significant positions in S&P 500 tracking ETFs like VOO and IVV, it has recently reduced its holdings in those specific funds.