Hantoo Asset Management Launches Ultra-Long-Term TDF2080... "Increases Expected Returns with 99% Allocation to Risk Assets"

Korea Investment Trust Management announced on the 9th that it has launched the first ultra-long-term Target Date Fund (TDF) product in Korea, aiming for the year 2080. The newly launched Korea Investment TDF Araseo Gold 2080 Fund increases the equity allocation. By including "gold," which has a low correlation with stocks, the fund improves its risk-adjusted returns.

The Korea Investment TDF Araseo Gold 2080 Fund is a lifecycle fund that automatically adjusts its portfolio according to the target date (vintage) to ensure stable performance for investors until retirement. This fund has a very high equity allocation among TDF products, making it highly suitable for investors with an aggressive investment style or those who prefer stock investments as part of a global asset allocation but are uncertain about which themes to invest in. As an ultra-long-term TDF product, it can also be used as a systematic investment strategy for young adults born in the 2000s who are already considering retirement plans or for tax-saving gift investments for children or grandchildren.

For example, assuming a monthly payment of 166,777 KRW and an annual compound return of 8%, the estimated value after 10 years would be approximately 30.5 million KRW (principal 20 million KRW), and after 20 years about 98 million KRW (principal 40 million KRW). Using the fund for gifting is advantageous for tax savings because earnings generated after reporting are exempt from taxation, and investors can also benefit from compound interest effects.

Additionally, the Korea Investment TDF Araseo Gold 2080 Fund sets the initial risk asset allocation at 99% to increase expected returns. Unlike most domestic TDF products, which set risk asset allocations below 80% in compliance with Korea’s retirement pension supervisory regulations, resulting in lower long-term expected returns, U.S. TDF products generally have an initial risk asset allocation averaging in the 90% range. In fact, U.S. TDF products have shown better long-term performance compared to domestic TDF products. According to Zeroin, as of the end of March, the U.S. TDF 2045 product group had an average annualized return of about 9.5% over the past five years, higher than the domestic equivalent vintage group’s average annualized return of approximately 6.6%.

To reduce the increased volatility from the expanded allocation to equities and alternative assets, this fund invests in "gold" and overseas stocks with currency exposure. According to Korea Investment Trust Management, "gold" has a low correlation with stocks and offers superior real returns compared to bonds, so investing in gold alongside stocks can relatively increase investment returns and enable efficient asset management.

Korea Investment Trust Management currently manages a total of eight vintages, including the newly launched 2080 vintage, and is the only domestic asset management company, excluding ETFs, to offer 2060 and 2080 vintages. According to Fund Guide, as of the closing price on the 8th, the 2060 vintage ranks first in one-year returns among vintages, with one-year and six-month returns of 22.42% and 17.70%, respectively.

Oh Won-seok, Executive Director in charge of pensions at Korea Investment Trust Management, said, “The Korea Investment TDF Araseo Gold 2080 Fund is suitable for investors who require aggressive pension asset management due to its higher equity allocation compared to existing TDF products,” adding, “We are expanding our TDF product lineup to reflect the diverse needs of pension investors.”