The number of domestic investors registered as professional investors has increased more than 7.6 times over the past five years.

The flag of the Financial Supervisory Service flutters in Yeouido, Seoul./Courtesy of News1

The Financial Supervisory Service announced on the 22nd that the number of individual professional investors registered as of the end of last year stood at 25,438. This represents a slight decline since peaking at 30,247 in 2022 after the system for professional investors was revamped in 2019.

Individual professional investors are part of a system that allows them to engage in higher risk investments more easily due to fewer regulations on investment solicitations and issuance compared to general investors.

To register as a professional investor, one must meet at least one of the mandatory requirements for investment experience, income, asset, or expertise. Investment experience requires maintaining a balance of over 50 million won in financial investment products, excluding low-risk options, for more than one of the last five years. The income requirement is an annual income of 100 million won, net worth of 500 million won, or at least one year of relevant professional experience such as a lawyer or in finance.

Of the 10,267 people who newly registered as professional investors last year, 7,692 met the income requirements, accounting for 74.9% of the total. Those meeting the asset requirement numbered 1,912, while 663 qualified based on expertise, making up 18.6% and 6.5%, respectively.

The FSS assessed that "overall, the ability to withstand losses and expertise among professional investors is considered to be at a good level" after reviewing the current state of the professional investor system.

A comparison of the portfolios of individual professional investors and general investors revealed significant differences in investment strategies. Professional investors allocated 69.9% of their investments to stocks and exchange-traded funds (ETFs), with 14.5% in bonds and 14.3% in funds, indicating a diversified approach. In contrast, general investors had 88.8% in stocks and ETFs, with bonds and funds at 6.5% and 3.8% respectively, suggesting a more concentrated investment.

Despite growing interest in overseas stocks, the proportion of overseas investment among professional investors increased less than that of general investors. From 2019 to 2024, the share of overseas stocks among professional investors rose from 8.7% to 13.3%, an increase of 4.6%. In contrast, general investors saw their overseas stock investment share grow from 2.6% to 17.6%, a jump of 15%.

However, this may partly be due to the fact that the share of overseas stock investment by professional investors was higher at 8.7% in 2019 compared to 2.6% for general investors.

The FSS noted, "In terms of investment portfolios, professional investors show a greater diversity of asset classes compared to general investors."

It added, "We will support the professional investor system to contribute to revitalizing the capital markets and fostering a sound investment culture, and we will prepare representative risk notification documents to inform about the risks associated with becoming a professional investor."