KCGI Management Launches Single-Unit Public Offering High-Yield Maturity Fund

KCGI Asset Management announced on the 6th that it will launch the 'KCGI Public Offering High-Yield Maturity Securities Investment Trust No. 2,' which raises funds for a certain period and then invests in public offering stocks without accepting additional funds. Immediately after the fund's establishment, it will participate in the subscription of LG CNS, considered a major new listing company this year.

This fund primarily invests in high-yield bonds and has the advantage of relatively large allocations to public offering stocks, as well as the potential for additional returns when interest rates fall due to bond investments. It is planned to be managed for 1 year and 3 months after establishment, selecting high-quality bonds among BBB+ rated or lower high-yield bonds, investing about 45-50% of the fund's net assets, and allocating 10-15% to highly liquid bonds rated AA- or higher such as government bonds, public bonds, and government bond futures.

A KCGI Asset Management official stated, "Considering that the bubble in public offering stock prices has somewhat deflated, that prices are at their lowest level in five years as of last year, and that many large-scale listings of high-quality major corporations are waiting this year, investment in the public offering stock market looks promising."

The unit-type subscription method applied to the public offering stock fund raises funds for a certain period and then invests in public offering stocks without accepting additional funds, allowing investors to fully enjoy the profits from public offering stock investments without sharing them with later investors. Although this method has been occasionally used in private funds, it is rare for it to be applied in public offerings.

A KCGI Asset Management official explained, "The unit-type subscription method was applied as the optimal way to prevent dilution of public offering stock investment returns."

From January 2021 to December 2024, KCGI Asset Management achieved profits in 91.0% of the public offering stock investments it participated in, with an average return of 64.0%, demonstrating excellent public offering stock selection capabilities.

The fund will be managed with a maturity of 1 year and 3 months from the initial establishment date, and additional subscriptions after the establishment date are not allowed. The total fee is 0.725% based on the Ae class (sales commission within 0.5% of the payment amount), and early redemption is possible but a 5% redemption fee will be charged on the redemption amount.

Investing in high-yield bonds carries credit risk, and bond valuation or trading losses may occur if interest rates rise. KCGI Asset Management explained that to reduce risks, it plans to thoroughly analyze the fundamentals of bond-issuing companies and adopt a strategy of short maturities.