[Capital Market Policy Meeting] "Broaden the Long-Term Investor Base by Allowing Minors to Open ISAs and Promoting Publicly Offered Funds"

Kim Hakkyun, Shinyoung Securities Research Center Director
Link ISAs to the independence fund, with greater benefits for longer holding periods
Publicly offered funds should prioritize long-term performance over sales figures
Improve the low divi

Calls have been made to allow minors to open Individual Savings Accounts (ISAs) and promote publicly offered funds to broaden the long-term investor base.

Kim Hakgyun, head of research at Shinyoung Securities, made the remarks on the 13th at a policy meeting on capital markets chaired by President Lee Jae-myung in Yeouido, Seoul. In a presentation titled “Expanding the Long-Term, Institution-Centered Investor Base in the Stock Market,” he said, “We should develop ISAs into a lifelong asset management platform for the public, promote publicly offered funds, and expand education on long-term and regular investment.”

The proposal would allow minors to open ISAs and link them to the “Woori Child Independence Fund.” The idea is to create a pathway from the Woori Child Independence Fund to a regular ISA and then to a pension account. He also called for replacing the current system, under which account holders must close and reopen their accounts to receive tax benefits, with incentives proportional to the length of time the funds are held.

He said publicly offered funds are a good vehicle for long-term diversified investment, keeping costs low, and reducing the emotional strain associated with investing. He added that institutional investors should restore trust by establishing fund management and sales structures that prioritize long-term performance and cost competitiveness over sales figures or short-term returns.

The proposal comes against a backdrop of imbalanced buying and selling. Through November 6 this year, individual investors made net purchases of 95 trillion won on the KOSPI and KOSDAQ markets. Foreign investors made net sales of 217 trillion won. Institutional investors also made net sales: 4 trillion won by banks, 6 trillion won by investment trusts, 7 trillion won by insurers, 8 trillion won by pension funds, and 9 trillion won by private equity funds. Foreign investors have been persistent net sellers since 2020, and this year’s net sales are the largest since the capital market was opened to foreign investors.

Dividend payouts and the management of listed companies were also cited as areas with room for improvement. South Korea’s dividend payout ratio is lower than those of other Northeast Asian countries with similar manufacturing-centered industrial structures. “For household funds to continue flowing into the market, individual investors must be able to build a shared experience of success,” Kim said. “We need to improve the low dividend payout ratio and manage listed companies to make the market itself more attractive.”

This content was produced with the assistance of AI translation services.