KB Asset Management "US Index Funds Attract Pension Funds"

As the New York stock market continues its upward rally, individual investors are increasingly channeling funds into index funds that invest in major U.S. indices within the pension fund market. Amid ongoing outflows from public offering funds overall and a trend of investors flocking to exchange-traded funds (ETFs), the inflow of retirement and personal pension funds into index funds is encouraging.

On the 7th, KB Asset Management announced that funds have been steadily flowing into its index funds investing in major U.S. indices from retirement and personal pension accounts.

According to KB Asset Management, as of the end of last month, over the past year, the ‘KB Star U.S. Nasdaq 100 Index’ and ‘KB Star U.S. S&P 500 Index’ pension classes attracted 49.4 billion KRW and 13.2 billion KRW respectively. Including these two funds, a total of more than 73 billion KRW has flowed into U.S. major index funds managed by KB Asset Management over the past year.

The strong fund performance is cited as the reason behind the capital inflow. As of the end of last month, the one-year returns for the ‘KB Star U.S. Nasdaq 100 Index’ and ‘KB Star U.S. S&P 500 Index’ funds were 41.3% and 21.2%, respectively.

Additionally, the advantages of index funds played a role. Index funds are passive funds aiming to track the market average returns of their benchmark indices. Due to their low fees, they are suitable for pension customers who prioritize stable, long-term investments. Investors unfamiliar with ETF trading can steadily grow their pension assets over the medium to long term by utilizing index funds.

Both the ‘KB Star U.S. S&P 500 Index’ and ‘KB Star U.S. Nasdaq 100 Index’ funds have their purchase and redemption prices determined on the morning of the day following the reservation date, allowing for faster redemption payments compared to other company’s equity products. Moreover, through passive investment, which has strengths in return consistency and performance predictability, efficient overseas investment is possible at a lower cost compared to active funds.

Lee Seok-hee, Head of Pension WM Division at KB Asset Management, said, "Index funds are the most efficient investment tool for long-term investment and are very suitable products for managing pension funds. Utilizing KB Asset Management’s U.S. major index funds, which combine stability and growth potential, will help prepare the necessary seed money for the future."

Meanwhile, KB Asset Management operates 22 types of index funds investing in major indices of the U.S., Europe, Vietnam, Japan, and Korea.