Korea's structured products market is seeing new competition with the debut of home-grown Korean hedge funds.
The new investment alternative is expected to take some market share from existing alternative assets like structured products, including equity-linked securities and equity-linked warrants. The funds are also expected to draw subscribers from other investment vehicles such as exchange-traded funds.
More than ten 'Korean-style' hedge funds debuted 23 December 2011, according to the Korea Financial Investment Association and the nation's Financial Services Commission. About 13 asset management companies including BNP Paribas, KB, KDB, Korea Investment, Kyobo, Mirae Asset and Samsung have unveiled hedge fund products since the last quarter of 2011.
Korean regulators have set the minimum investment threshold at KRW500m ($438,600). For its part, Samsung Life Insurance has invested KRW30bn ($25.8m) into a hedge fund operated by affiliate Samsung Asset Management, according to local reports.