Public Growth Fund sells out in 5 days, second tranche expected in September

The Public Participation Growth Fund, which sold out within five business days of its launch, is expected to go on sale again as early as September. The Financial Services Commission is expected to release detailed plans for a second round of sales after the first-round subscription period closes Friday.

According to financial regulators, the FSC has recently been gathering industry feedback from more than 20 banks and brokerages that participated in the first-round sales. Officials say they plan to move quickly once the details are finalized.

The fund launched May 22 and exhausted its 300 billion won (about $196 million) online allocation within two business days. The remaining offline tranche sold out by May 29, five business days after launch. The fund's strong reception was driven by a combination of factors: it channels investment into companies across 12 advanced strategic industries — including semiconductors, AI, biotech, defense and robots — over a five-year horizon, while offering government-backed loss protection covering 20 percent of invested capital, along with income deduction benefits and a separate tax rate on dividend income.

FSC Chairman Lee Eok-won officially confirmed plans for a second tranche during an appearance on the YouTube channel SamproTV on May 30.

Specific details have yet to be announced, but the second fund is expected to launch around September following a public offering process once the supply volume and distribution method are determined. The size of the offering will be decided with additional income deductions and fiscal outlays in mind; maintaining the existing 600 billion won scale is among the options under review. Regulators are also considering keeping the overall fund structure from the first round intact while reselecting only the sub-fund managers to accelerate the sales process.

The distribution method may also be adjusted. During the first round, bank offline allocations sold out within two days, while brokerage offline allocations took the full five days. Some brokerages reportedly asked the FSC to raise the online allocation to more than half the total, noting that many lower-income investors also accessed the fund through online channels. Options under discussion include expanding the online share at brokerages and increasing the offline allocation at banks.

The higher-than-expected participation from lower-income investors has also raised the possibility of expanding the quota reserved for that group. The FSC had set aside 20 percent of the fund for investors earning 50 million won or less in employment income, or 38 million won or less in comprehensive income, but in fact 38.6 percent of subscribers fell into that category. "We will include a range of details in a future announcement," an FSC official said, referring to the second-round launch.