South Korea’s Financial Supervisory Service (FSS) is strengthening investor protections for 10 categories of high-risk funds, including overseas real estate funds, REITs, leveraged and inverse funds, covered call funds, target conversion funds, gold spot funds and overseas fund-of-funds. From the 30th of this month, simplified prospectuses must place four key risks on their first page: principal loss and three product-specific risks. Managers must also disclose prior products of the same type that suffered losses exceeding 20%, including the fund name, investment region and assets, loss date and loss magnitude. Fund profit-and-loss graphs and stress-test scenario results must be attached to securities registration statements. Deputy Governor Seo Jae-wan briefed asset-management and compliance executives from eight domestic real estate fund managers, along with Korea Financial Investment Association executives, at FSS headquarters in Yeouido, Seoul, on the 9th. The regulator has also strengthened reviews through a special team and multiple reviewers, while requiring overseas real estate managers to attach on-site due diligence self-inspection reports. Real estate funds with subordinated equity structures must warn that falling property values could enable senior lenders to enforce collateral rights and cause partial or total principal loss. The FSS’s stress-test requirement for overseas real estate funds, but not for single-stock leverage products launched in late May, has drawn criticism.