Korea Investment Management Launches Korea Investment US Dollar-Cost Averaging Build-Up Target Conversion Fund

Korea Investment Management announced on May 12 that it will launch the "Korea Investment US Dollar-Cost Averaging Build-Up Target Conversion" fund, which seeks stable returns by gradually purchasing US Nasdaq exchange-traded funds (ETFs) until a target return is reached. Subscriptions for this fund are available at NongHyup Bank and Hana Bank until May 23.

The Korea Investment US Dollar-Cost Averaging Build-Up Target Conversion Fund employs a "dollar-cost averaging build-up strategy." This strategy involves identifying opportunities to buy at lower prices, making purchases in installments, and accumulating these purchases to improve profitability and reduce volatility.

To execute this strategy, at the fund's inception, approximately 30% of the fund's total net assets are allocated to ETFs tracking the US Nasdaq 100 Index, while the remaining 70% is invested in high-quality domestic bond ETFs. If market conditions fluctuate and the price of the Nasdaq 100 ETF in the portfolio drops by 1%, about 5% of the net assets held in bond ETFs are sold to raise cash, which is then used to purchase additional Nasdaq 100 ETFs. This process is repeated until the allocation to Nasdaq ETFs approaches 100%.

The initial 70% bond allocation consists of ETFs tracking the KIS Composite Bond (AA- or higher) Index, which represents the domestic bond market. These bonds are considered medium-risk and medium-return assets, and are currently favored due to the difficulty of predicting interest rate trends. According to FnGuide, the default rate for AA-rated bonds over the past 17 years has been 0%.

This product is structured as a "target conversion" fund, meaning that when the target return (7%) is achieved, the portfolio is rebalanced into a bond fund. All assets are then invested in relatively stable short-term bond and monetary stabilization bond ETFs, with the aim of preserving returns until liquidation.

The fund's management period varies depending on when the target return is achieved. Specifically, it is: ▲ one year from the initial setup date (if achieved within six months), ▲ six months after conversion (if achieved after six months), or ▲ three years (if the target return is not reached).

Cha Hyemin, head of Global Quantitative Management at Korea Investment Management and the fund's responsible manager, introduced the fund by stating, "We launched the 'Korea Investment US Dollar-Cost Averaging Build-Up Target Conversion' fund for investors who wish to invest in core US technology stocks that drive the global economy, but are concerned about market volatility." She added, "By combining asset allocation with a dollar-cost averaging strategy, we aim to reduce the burden on investors regarding the timing of profit realization and enhance convenience."

She further explained, "The United States is implementing policies focused on prioritizing its own interests and strengthening its global hegemony. The solid fundamentals of US companies that dominate the global market are expected to continue. We plan to pursue reduced volatility and superior long-term returns through balanced investments."

The Korea Investment US Dollar-Cost Averaging Build-Up Target Conversion Fund is a performance-based product, and past returns do not guarantee future results. Principal loss may occur depending on the fund's performance.