Korea to introduce high-yield bond funds

New legislation may lead to market chaos, warn fund managers.

South Koreas National Assembly is hurrying through a bill to allow investment trust management companies offer high-yield fixed-income funds to investors. The legislation was initially slated to pass by July 1, but last-minute wrangling with the tax authorities means it will not be passed for another two or three weeks.

The government is keen to offer a broader product range to retail and institutional investors and deepen the domestic capital markets. Fund managers are wary of the...

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