Mrs. Kim is a 43-year-old housewife, who finds joy in shopping at the local wholesale mart. She shops beef, pork, bread, frozen food, seafood, house goods and sometimes even electronics. Fortunately enough, she does not have to run through grocery store to bakery to electronics shop, but can simply pick up every item at one central place, wholesale mart. There she simply takes best deal out of the range of goods at low prices. Of course, that is the beauty of shopping at wholesale mart and why she loves it. In same principle, you will find that a fund supermarket has a very similar role when it comes to shopping for investments.
A fund super market is quite a new concept in Korea. It is an online platform that allows investors to purchase variety of investments at one central location. As a part of an effort to return more savings to investors and to provide better financial services at lower cost, the Financial Services Commission (FSC) plans to establish fund supermarket system in near future. The FSC has recently announced that it will take model after advanced countries’ system and develop transparent and efficient fund supermarket system.
Fund supermarkets have been operational in many countries around the globe. The United Kingdom, the United States, Singapore, Luxemburg and countless others adopted fund supermarkets for financial efficiency and easy access. Under their system, investors are usually given choices to take independent financial service providers in the selection of a fund supermarket platform. That is to say, they can freely shop variety of funds within the platform of selection. If investors are not sure which platforms to choose and which funds to include in portfolio, they can ask for advisory service from licensed independent financial advisors. If it is to implement in Korea, Fund-selling firms such as asset management firms and securities firms will jointly involve and form one big fund supermarket. They will be able to enter the market and sell various types of funds at ease. It will also allow independent financial advisors to take part and to provide advisory service on funds selection. Below illustrates how each party interacts around the fund supermarket system
- Securities and asset management firms contribute scores of funds on market
- Investors could either invest directly through a fund supermarket or seek advice from IFAs
Hence, fund supermarket system is a convenient and cost-efficient way for investors to make investment decision on a diverse range of investment funds in one place. It also encourages the market transparency and liquidity, consolidating individual fund selling channels into one unified central market. It surely is also expected to bring huge benefits in Korea once it comes to an implementation.