Korean Investors Shift Funds from Savings to Stock Market, Driven by ETF Demand
A significant trend is underway in South Korea as investors increasingly move funds from traditional savings accounts and retirement pensions into the stock market, particularly exchange-traded funds (ETFs). This shift reflects a growing appetite for higher returns amid a rising KOSPI and evolving government policies.
Retirement Funds Embrace Riskier Assets
Shinhan Investment & Securities data reveals a substantial increase in non-guaranteed principal and interest products within individual retirement pensions (IRPs). At the finish of 2024, these products totaled KRW 1.7036 trillion, nearly doubling (a 95.6% increase) from the previous year. Defined benefit (DB) plans and defined contribution (DC) plans also saw significant growth in profit-seeking investments, rising by 138.6% and 56.1% respectively.
ETFs are at the core of this movement. The ETF balance within IRPs surged 114.5% year-over-year to KRW 1.0762 trillion, while DC-type ETFs increased by 91.2% during the same period. Popular ETF investments include index funds tracking the S&P 500, Nasdaq, KOSPI, and gold spot ETFs.
As of February 13, 2026, the balance of non-guaranteed products in IRPs reached KRW 2.07 trillion, exceeding 2.2 times that of guaranteed products (KRW 910.8 billion). Non-covered products now represent 69% of DC and IRP balances, nearing the risk asset limit of 70%.
Demand Shifts Towards Domestic Equities
While US index funds were previously favored, recent trends indicate a growing interest in ETFs focused on the domestic KOSPI, semiconductor, and technology stocks. This shift is attributed to government policies and the strong performance of Korean semiconductor companies, which are seen as enhancing the long-term growth potential of retirement pensions.
Shinhan Investment & Securities officials advise caution against “chase purchases” and neglecting account management due to the “fear of missing out” (FOMO). They recommend maintaining long-term returns by diversifying with bonds after realizing profits.
Long-Term Deposits Decline
The shift away from safety is also evident in the decline of long-term bank deposits. According to the Bank of Korea’s Economic Statistics System, the total balance of term deposits with a maturity of two years or more decreased by KRW 7.7128 trillion to KRW 52.986 trillion as of December 2025. This is the largest decline since 1991, surpassing the previous record set during the 1998 foreign exchange crisis.
Conversely, deposits with maturities between one and two years increased by KRW 24.4752 trillion to KRW 635.5193 trillion, and deposits with maturities less than one year rose by approximately KRW 6 trillion to KRW 406.3325 trillion. Total term deposit balances increased to KRW 1,094.8378 trillion, a rise of KRW 22.7885 trillion.
Investor Deposits Surge
The size of investor deposits, representing funds awaiting investment in the stock market, surged from KRW 57 trillion at the beginning of 2025 to KRW 111 trillion at the beginning of February 2026, reflecting a growing willingness to manage funds in the short term.
Concerns and Recommendations
Some experts express concern about the influx of funds into the volatile stock market. Jeong Jeong-soo, head of the pension business at Shinhan Investment & Securities, emphasizes the importance of avoiding impulsive investment decisions and maintaining a balanced portfolio by incorporating bonds after profit-taking.