Korea Investment Management announced on September 15 that it will launch the Korea Investment Shareholder Return Level-Up Target Conversion Fund, which invests in companies expected to benefit from the full-scale era of shareholder returns. Subscriptions will be available at Shinhan Bank until September 26.
The Korea Investment Shareholder Return Level-Up Target Conversion Fund is characterized by its balanced investment in bond exchange-traded funds (ETFs) and shareholder return growth companies, pursuing both growth and stability. The strategy involves investing in shareholder return growth companies to earn capital gains and dividend income, while also generating bond interest through domestic high-quality bond ETFs. The bond ETFs included in the portfolio track the “KIS Composite Bond (AA- or higher) Index,” which comprises leading domestic high-quality bonds.
Companies are selected not only based on shareholder returns, but also by evaluating the following factors: ▲ sustainability of high profits ▲ sound financial structure ▲ high return on equity (ROE) ▲ whether the company is innovating from a value stock to a growth stock. The fund focuses its investments on 20 to 30 carefully selected stocks, aiming to capture both intrinsic value and growth potential.
In line with its nature as a “target conversion” fund, the Korea Investment Shareholder Return Level-Up Target Conversion Fund will rebalance its portfolio into a bond fund once the target return (7%) is achieved, based on the A-class adjusted price. Thereafter, the entire portfolio will be managed in relatively stable domestic bonds and liquid assets until maturity, seeking stability until liquidation.
The fund’s management period varies depending on when the target return is achieved: △ one year from the initial setup date (if achieved within six months) ▲ six months after fund conversion (if achieved after six months) ▲ three years (if the target return is not achieved).
The Korea Investment Shareholder Return Level-Up Target Conversion Fund will be managed by Kim Kibaek, head of ESG Management at Korea Investment Management, who has visited over 1,300 companies over more than ten years. Leveraging his extensive experience, Kim employs a strategy of identifying high-quality but lesser-known companies to capture opportunities for excess returns. The ACE Shareholder Return Value Active ETF, also managed by Kim, is the largest among the six shareholder value ETFs listed in Korea. As of September 12, its net asset value stood at 82.1 billion won.
Kim stated, “Since 2022, the Korean stock market has seen a rapid increase in dividend payout ratios as share buybacks and cancellations have become more common.” He added, “The Korea Investment Shareholder Return Level-Up Target Conversion Fund will focus on mid-sized and small companies expected to strengthen shareholder return policies, such as dividend increases and share buybacks and cancellations, especially as the first generation of business leaders retires.”
Kim further emphasized, “We designed this fund to proactively invest in shareholder return growth companies, capitalizing on the structural changes in the capital market. Once the target return of 7% is achieved, the fund will automatically convert to a bond type, thereby realizing profits.”
The Korea Investment Shareholder Return Level-Up Target Conversion Fund is a performance-based product, and principal loss may occur depending on investment results.
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