[Asia Economy Reporter Junho Hwang] Three types of customized domestic equity funds that allow investment according to various market perspectives held by individuals, such as the Korean-style 4th Industrial Revolution, ESG (Environmental, Social, Governance) management, and tech pillars, will be launched.
On the 28th, Sungjin Jung, Head of Equity Management at Korea Investment Trust Management, said at a press conference held via YouTube, "Customers' market perspectives have become clearer, and their goals have become more specific and diversified," adding, "We are launching the K-New Deal Fund, Tech Fund, and ESG Fund." The K-New Deal and Tech Funds pursue relatively higher returns, while the ESG Fund aims for stable excess returns.
Launch of K-New Deal, Tech, and ESG Funds
The Korea Investment K-New Deal Fund, with assets under management of 14.1 billion KRW, focuses investment on the large-scale project called the 'Korean New Deal.' The Korean New Deal is a massive project with a total budget of 160 trillion KRW over six years. The K-New Deal Fund invests with the view that the Korean New Deal can bring a paradigm shift to Korea's economy and thus play a leading role in the stock market. The K-New Deal Fund concentrates investment in winner-takes-all companies, composing 70% of its portfolio with leading stocks in sectors within the New Deal index. The remainder is managed flexibly according to market conditions to generate excess returns.
Fund manager Daesik Kim explained, "The government has presented the KRX-BBIG index for sectors expected to benefit from the New Deal," adding, "The next-generation leaders driving Korea's growth will be secondary batteries, bio, internet, and gaming sectors."
The Korea Investment Tech Fund, with assets under management of 8.7 billion KRW, operates with a basic strategy focusing on high-growth areas in the tech sector such as memory/non-memory (system semiconductors), artificial intelligence, 5G, secondary batteries, and automotive electronics. In particular, it invests in small and mid-cap tech stocks whose earnings growth is expected this year but whose stock prices have not yet been highlighted. Companies like Symtek, Nepes, and DB HiTek fall into this category. Fund manager Chan Kwak said, "Based on about 11 years of experience in the tech sector, we have built accumulated technological understanding and an investment pool," adding, "We expect the first half of this year to be the turning point for prices and earnings in the tech sector."
The Korea Investment ESG Fund, with assets under management of 4.5 billion KRW, uses the MSCI Korea IMI ESG Screened Index as its business model and follows a negative screening strategy while combining Korea Investment Trust Management's responsible investment methodology and stock selection tools to pursue an ESG-integrated strategy. It constructs a portfolio that seeks excess returns compared to the market by combining K-New Deal policies and ESG factors. The detailed portfolio composition strategy to reflect weighting includes ESG momentum strategy, ESG turnaround strategy, and ESG growth strategy.
Fund manager Chan Kwak stated, "Since Korea's ESG investment environment is still in an early stage with many areas needing improvement, we benchmark the MSCI index to align with global standards." He added, "The ESG market is expected to grow rapidly in the future and will become a product that every investor will include at least one of in their asset portfolio."
Launching Three Funds Amid the Trend of Direct Investment?
Regarding the reason for launching three funds amid the trend of direct investment, Head Jung said, "We know that customers have great disappointment with funds. Not only Korea Investment Trust but almost all asset management companies empathize with this and are working hard to avoid repeating such mistakes," adding, "Currently, there is a lot of standby capital in the stock market, and due to future market volatility, it is expected that funds will attract capital." He further explained, "Looking at past market situations, when the market enters a major uptrend and a correction of about 10% occurs, capital that was concentrated in the stock market looks for other investment destinations. At this time, capital flows into funds, and these funds are prepared for that."
Regarding the differentiated strategy to compensate for the late launch of the K-New Deal Fund compared to other asset management companies, he said, "It is true that the launch of these funds was delayed, but we have secured management strategies and experience that can be differentiated," adding, "While many other products related to the Korean New Deal are passive investments, the K-New Deal product aims for high returns through active investment," and "The ESG Fund is still at the starting stage due to the relatively small amount of liquid capital."
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