The Korea Financial Investment Association noted on the 31st that the number of individual comprehensive asset management accounts (ISA) subscribers exceeded 6 million for the first time in 9 years since their launch.
The Korea Financial Investment Association stated in a press release that as of the end of last month, the number of ISA subscribers was 6,043,000 and the total investment amount reached 36.54 trillion won. The ISA is a tax-advantaged account that allows individuals to manage and invest in various financial products such as domestically listed stocks, funds, exchange-traded funds (ETFs), real estate investment trusts (REITs), and deposits all in one place.
The number of ISA subscribers and the subscription amount have sharply increased since the introduction of the 'investment intermediary ISA' in February 2021, which allows subscribers to directly invest and manage in domestic bonds, stocks, etc.
ISAs are classified into three types: the intermediary type, trust type, and discretionary type. The trust type can be managed through a trustee, but stock transactions are difficult in real time, and it deals with funds and deposits. Additionally, trust fees are incurred. The discretionary type allows investment experts to manage the assets, and a separate discretionary fee applies.
The number of subscribers to the intermediary ISA reached 5,056,000, accounting for 83.7% of the total. The trust type, which had 1,719,000 subscribers at the end of 2020, decreased by 851,000 to 868,000 (14.4%) by the end of last month. During the same period, the discretionary type also decreased from 220,000 to 119,000 (2.0%) for a decline of 101,000.
By financial sector, the largest number of subscribers was from securities companies, with 5.1 million (84.3%). This reflects the fact that the popular intermediary ISA can only be opened at securities firms. The number of bank subscribers, which are the outlets for trust type ISAs, was 947,000 (15.7%), decreasing to half compared to 1,783,000 at the end of 2020.
Of the funds in the intermediary ISA, 40.6% were managed as ETFs, while 32.8% were invested in stocks. For the trust type, the proportion of deposits was 95%, and for the discretionary type, funds accounted for 97.1%.
By age group, the increase among those in their 20s and 30s was particularly high. The proportion of subscribers aged 20 and 30 among ISA holders increased from 32.8% at the end of 2020 to 40.1% by the end of last month, a rise of 7.3 percentage points. The Korea Financial Investment Association analyzed that this demographic is more familiar with utilizing financial investment products than middle-aged individuals, leading to a greater response since the introduction of the intermediary ISA.
After a certain period, ISAs aggregate profits and losses from within the account, and up to a maximum of 2 million won for the regular type (and 4 million won for the low-income type) is tax-free. A separate tax benefit with a low rate of 9.9% applies to amounts exceeding the tax-free limit.
The Korea Financial Investment Association reported that with the government's plan to expand ISA tax benefits, the number of subscribers is expected to increase further. According to the government's announcement earlier this year, the tax-free limit will rise to 5 million won for the regular type (and 10 million won for the low-income type), and the contribution limit will be raised from 20 million won annually (totaling 100 million won) to 40 million won annually (totaling 200 million won).
Lee Hwan-tae, head of the industrial market division at the Korea Financial Investment Association, said, "ISAs are referred to as 'universal savings accounts' that have broadened opportunities for asset formation among the public and have served as a catalyst for economic growth." He added, "With the expansion of tax benefits and the possibility of extending the eligible age for subscriptions to minors, it will help activate public wealth management and strengthen the virtuous cycle structure of capital markets."