Korea Investment Management Launches Korea Investment China Big Tech and AI Leaders Target Return Fund

Korea Investment Management announced on April 22 that it will launch the "Korea Investment China Big Tech and AI Leaders Target Return Fund," which simultaneously invests in leading Chinese technology companies and domestic bonds. Subscriptions for this fund will be available at KB Kookmin Bank until April 29.

The Korea Investment China Big Tech and AI Leaders Target Return Fund invests up to 40% in stocks of major Chinese big tech and artificial intelligence (AI) companies, and more than 60% in domestic bonds, aiming to achieve both capital gains and stability.

To select stocks, Korea Investment Management uses its proprietary AI model to identify leading Chinese big tech and AI-related stocks. The company then evaluates individual stocks based on growth potential, market dominance, and representativeness, using sectoral market share analysis and industry research. Around 25 stocks that are driving technological innovation and growth in China will be selected.

The portfolio is managed by dividing it into a Core Portfolio and a Strategy Portfolio, allowing for flexible responses to market conditions and industry changes while minimizing risk. The Core Portfolio will consist of the seven Chinese equivalents of the Magnificent 7 (M7) companies, selected by the company itself, with a 70% allocation: Alibaba (cloud), Tencent (platform), JD.com (e-commerce), Baidu (generative AI), BYD (autonomous driving), Cambricon (AI semiconductors), and Xiaomi (wearables). The Strategy Portfolio will have a 30% allocation to next-generation big tech leaders such as Pinduoduo (e-commerce), SMIC (foundry), Hua Hong Semiconductor (foundry), and Will Semiconductor (fabless). The inclusion or exclusion of stocks in the Strategy Portfolio can be adjusted freely depending on market conditions.

For bond assets, the company will select and invest in optimal short-term bond exchange-traded funds (ETFs), money market funds (MMFs), and repurchase agreements (RPs) after assessing factors such as profitability, stability, and cost. In addition to bond interest, the fund aims to enhance stability by capturing additional returns in the event of interest rate cuts.

This product is a "target return" fund, meaning that once the target return (7%) is achieved after inception, the fund will shift its management approach. All existing assets will be liquidated and reinvested in domestic bond-related collective investment securities and liquidity assets to maintain stable returns until redemption. To maximize safety, the fund plans to invest in ultra-short-term bond ETFs with shorter average maturities (duration) and assets with enhanced stability and liquidity.

Kim Wonjae, Head of Global Equity Management at Korea Investment Management and the responsible manager for the fund, stated, "Recently, competition in emerging industries within China has intensified and regulations have been eased, following the escalation of US-China core industry rivalry after the election of US President Donald Trump." He added, "Since the emergence of DeepSeek, the Chinese government has recognized the importance of private enterprises in narrowing the US-China gap in AI, and is expected to actively support big tech companies to maintain leadership in the sector."

He emphasized, "The Korea Investment China Big Tech and AI Leaders Target Return Fund aims to provide investors with satisfaction by pursuing the benefits of explosive growth in Chinese big tech companies, while also seeking stability through bond investments."

The Korea Investment China Big Tech and AI Leaders Target Return Fund is a performance-based product, and past returns do not guarantee future results. Principal loss may occur depending on investment performance.