Sold out in 5 days, Korea's 'national fund' to launch second tranche in Q3

Financial authorities plan to launch a second tranche of the public participation-type National Growth Fund in the third quarter. The additional supply will match the first tranche at 600 billion won (about $393 million). The move comes after the fund sold out ahead of schedule last month, confirming demand well beyond initial expectations.

Financial Services Commission Chairman Lee Eok-won announced the second-tranche plan at a meeting with National Growth Fund managers held Friday at the Korea Financial Investment Association in Yeouido, Seoul. "The National Growth Fund sold out in five days," Lee said. "We could feel how strong the public's appetite is for stable yet profitable investment options."

As with the first tranche, the government will contribute 120 billion won — 20 percent of the public subscription amount — as subordinated capital. The required budget will be drawn from funds already allocated to the National Growth Fund this year, with no additional appropriation needed. Specifically, 40 billion won will come from the 150 billion won earmarked for direct investment, and 80 billion won from the 400 billion won set aside for infrastructure investment and lending.

To accelerate the launch, authorities plan to retain the fiscal mother-fund manager and public fund managers selected for the first tranche, and recruit only the 10 sub-fund managers responsible for actual investment operations.

Details on sales arrangements — including allocations for lower-income investors and the share of online sales — will be finalized after consulting banks, brokerages and other distributors, with the goal of improving public convenience. Market participants have floated proposals to expand the share allocated to lower-income investors and to increase the proportion of bank offline sales and brokerage online sales in line with each channel's characteristics.

"The second fund launch is intended to meet public demand and contribute to an economic leap forward through productive finance," Lee said, urging Korea Development Bank and other institutions to push ahead with the necessary procedures and review whether the subscription process can be made more user-friendly.

The meeting also covered ways to strengthen fund managers' accountability and improve performance through additional incentives. Actual investment operations for the first-tranche National Growth Fund are set to begin Monday.

"The National Growth Fund was built with the precious savings of the public," Lee said. "The people entrusted their money based on the government's strong commitment to nurturing advanced strategic industries, so the most capable managers must steward that wealth well and deliver strong returns."

The FSC has introduced several mechanisms to boost returns. Sub-fund managers are required to contribute at least 1 percent of their own capital as subordinated investment, and managers become eligible for performance fees if the fund's cumulative return exceeds 30 percent over five years. To further support returns, managers may allocate up to 40 percent of fund assets to discretionary investments, and listed-share investments are permitted up to 30 percent even within the primary investment mandate.

Additional incentive measures were also unveiled at the meeting. The move follows a directive from President Lee Jae Myung at a Cabinet meeting on May 26, when he asked officials to develop further incentives to promote competition among fund managers. At the time, the president said he hoped the National Growth Fund would "contribute, even modestly, to easing the wealth gap or slowing its widening."

Under the new measures, managers that deliver strong performance will receive preferential treatment in the selection process for future National Growth Fund tranches and other policy funds. Beyond the mandatory disclosures in asset management reports — including public fund returns and sub-fund investment details such as the top 10 holdings and their weightings — individual sub-fund returns will also be made public to sharpen competition among managers.

Alongside this, the screening and monitoring of incentive systems for key investment personnel will be tightened during sub-fund manager selection, to prevent the departure of core staff and reinforce management accountability.

At the meeting, sub-fund managers presented their individual investment strategies. The broad approach centers on channeling fresh capital into high-growth companies in advanced strategic industries as the primary investment focus, while using discretionary investments to secure stable returns through a balanced portfolio.

Three managers — Timefolio, The J and Suseong Asset Management — said they would participate as Kosdaq venture funds, adding that they plan to pursue higher returns through involvement in the IPO market.

Going forward, Mirae Asset, Samsung and KB Asset Management — the public fund managers — along with Korea Growth Investment Corp., which manages the fiscal mother fund, will closely monitor the National Growth Fund's operations and performance.

국민성장펀드·연금투자로 ‘440만원 환급’ 챙기는 절세 공식은? [이세상]

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