Samsung Asset's Default Option Asset Allocation Fund Ranks 1st to 3rd in 2-Year Returns

Samsung Asset Management's products recorded top-tier mid- to long-term returns in the default option for retirement pensions.

Samsung Asset Management announced on the 11th that its asset allocation funds (Balanced Funds) for the retirement pension default option (Pre-Designated Management System) ranked first to third in two-year returns with Samsung Mildang Daramswi Global EMP, Samsung EMP Real Return, and Samsung Lifetime Auto Split Trading EMP, respectively. Another asset allocation fund, Samsung OCIO Solution Stable, ranked fifth.

The retirement pension default option is a system where, if a retirement pension subscriber does not decide on a financial product to manage their accumulated funds within a certain period, the financial company automatically manages the funds according to a pre-established management method. Products invested in under the retirement pension default option include principal-guaranteed products, Target Date Funds (TDF), and asset allocation funds (BF). Financial companies combine individual products within these categories to create portfolios of ultra-low risk, low risk, medium risk, and high risk types. Individual retirement pension investors are guided to select and designate these in advance.

Balanced funds generally set a basic allocation ratio between stocks and bonds and then adjust the allocation ratio according to market conditions to actively pursue returns. These include types that trade to maintain a preset target volatility level (TRF) and products that reduce stock allocation and invest mainly in income-type assets to prepare for withdrawal periods (TIF). These are generally classified as bond-mixed or stock-mixed products. Since the introduction of the default option system in July 2022, 18 products were initially selected, and to date, a total of 27 products from 9 asset management companies have been included and managed.

Since the introduction of the default option, as of September 10, 12 out of 18 balanced funds recorded two-year returns exceeding 10%. The average return reached 11.8%. Samsung Asset Management's Samsung Mildang Daramswi Global EMP, Samsung EMP Real Return, and Samsung Lifetime Auto Split Trading EMP recorded returns of 22.6%, 16.9%, and 16.2%, respectively. Considering that principal-guaranteed products yielded about 6% during the same period, this highlights why individual subscribers should select investment products through the retirement pension default option.

As of the end of June this year, many of these products are included in portfolios that recorded the highest returns by default option type. The Samsung Securities Low-Risk Portfolio 2, which ranked first in returns among low-risk portfolios in the first half of the year, included the Samsung Mildang Daramswi Global EMP fund. The Samsung Life Medium-Risk BF2, which ranked first among medium-risk portfolios, included the Samsung EMP Real Return fund.

Both TDFs and balanced funds are fundamentally asset allocation funds that diversify investments across various assets such as stocks and bonds. While TDFs mechanically adjust the stock and bond ratios according to a formula preset based on the investor's life cycle, balanced funds actively adjust allocations based on economic or market conditions regardless of the investor's age, aiming for additional returns compared to the market. For investors seeking relatively stable management performance through asset allocation investment but expecting more aggressive investment returns than TDFs, balanced funds are a more suitable product type.

Lim Byung-hyo, head of the AI Quantitative Management Team at Samsung Asset Management, said, "The past two years have been a period experiencing both downturns and upturns in stock and bond markets, providing a stage to test the performance creation and crisis management capabilities of asset allocation funds." He added, "Rather than following uncertain market forecasts, the fund's management strategy of accumulating long-term performance through a quantitative investment process proved effective."