'KOSPI 5000' is coming... opened a retirement pension account and was startled [Ilhwak Pension Retirement Wealth]

For long-term retirement pension investments, U.S. and Chinese ETFs are still the 'trend'

The domestic stock market is hot. It feels like just yesterday people were surprised the KOSPI index passed 3,500, but it has exceeded 4,000 and reached 4,200, and now it is eyeing 4,500 and 5,000. The symbolic phrase 'KOSPI 5000 era' is no longer just a dream. JP Morgan has even released an analysis saying that exceeding 5,000 and reaching 6,000 is possible.

But it's true that one hesitates when asking how long this can be sustained. While the rise in the KOSPI index has some roots in fundamental structural improvement, a large part is also due to the 'semiconductor rally' and 'liquidity.'

So what is the flow of retirement pension accounts, which are among the most long-term funds in domestic stock market investments? I looked at the top 20 exchange-traded funds (ETFs) by net purchases in Mirae Asset Securities' defined contribution (DC) and individual retirement pension (IRP) accounts by quarter this year.

In the first quarter, before the domestic market's upward trend fully unfolded, only one domestic equity ETF was in the top 20 (the KOSPI index rose 3.4% during this period). TIGER Shipbuilding TOP3 (KRW 11.8 billion) ranked 18th.

Ranked first was TIGER U.S. S&P 500 (KRW 96.9 billion), second was TIGER U.S. Nasdaq 100 (KRW 52.3 billion), and third was ACE Tesla Value Chain Active (KRW 50.2 billion).

Among the top 20, 14 were U.S.-investment ETFs, 2 were parking-type, 1 was gold, 1 was China, 1 was an asset-allocation target-date fund (TDF), and 1 was a domestic equity ETF.

The second quarter, when the KOSPI index rose 23.8%, was a bit different. Ten domestic investment ETFs were in the top 20. Examples include TIGER 200 (KRW 22.3 billion) at 3rd, PLUS High Dividend Stocks (KRW 17.8 billion) at 6th, and KODEX Securities (KRW 16.5 billion) at 9th. First and second remained TIGER U.S. S&P 500 (KRW 59.0 billion) and TIGER U.S. Nasdaq 100 (KRW 32.9 billion).

However, in the third quarter, when the KOSPI index's return fell somewhat (11.49%), the pattern changed again. There were only three domestic equity ETFs among the top 20. Their rankings fell to 10th TIGER 200 (KRW 17.5 billion), 15th TIGER Shipbuilding TOP10 (KRW 14.5 billion), and 17th KODEX 200 (KRW 13.4 billion).

On the other hand, the share of overseas investment ETFs rose again to 14 out of 20. China equity ETFs also numbered three, the same as domestic equity ETFs.

It is not yet known how the fourth quarter will look as the KOSPI index begins to run again. However, the fact that domestic equity investment in retirement pension accounts, which are long-term funds, fluctuates so much can be interpreted as indicating that trust in domestic market investment is still not strong enough.

Although the proportion of domestic equity rises when returns are high, even a slight decline causes the share of U.S. investments to increase sharply again. This means that domestic equity investments in retirement pension accounts often have a 'short-term trading' character.

Therefore, experts point out that fundamental policies are needed to build investor confidence in domestic stocks similar to U.S. stocks, such as adjusting the separated taxation of dividend income to lower the top tax rate and offering incentives to strengthen corporate competitiveness.

That way, corporate profits can increase, and with those resources distributed as dividends in a virtuous cycle, long-term investment can be expanded.

Han-shin Park, reporter phs@hankyung.com