'TDF' Tailored to Life Cycle Remains Popular This Year as Well

[Asia Economy Reporter Oh Ju-yeon] The popularity of Target Date Funds (TDF), known as 'retirement-tailored funds,' continues this year. TDFs, which gained attention last year due to increased preference for safe assets amid US-China trade disputes and economic slowdown concerns, are steadily attracting investments even with expectations of a stock market rise this year. Since the investment proportions between safe and risky assets are adjusted according to life stages, funds are flowing more stably compared to other thematic funds.

According to financial information provider FnGuide on the 29th, TDFs have attracted 163.5 billion KRW so far this year. Extending the period to the recent six months, the inflow amounts to 871.5 billion KRW, and based on one year, about 1.3632 trillion KRW has been invested. TDFs are asset allocation funds that adjust the proportions of stocks, bonds, and other assets according to life stages, targeting the expected retirement year. In the US, TDFs began to increase significantly since the mid-2000s, and in Korea, they have been actively developed since 2016. They focus on maximizing returns through aggressive investments in the 20s and 30s, and allocate assets mainly to bonds in the 40s and 50s to secure stable returns. Because of this, recently, TDFs are being used not only for retirement fund preparation but also as a financial investment tool, continuously attracting investment.

In the past month alone, 224.9 billion KRW has flowed in, with 39.8 billion KRW added in just one week. Compared to other thematic funds, this inflow trend is remarkable. Dividend stock funds, considered stable investment options, saw outflows of 173.2 billion KRW and 95.2 billion KRW during the same periods, and leverage funds, which posted over 8% returns in a month thanks to stock market optimism, experienced outflows of 381.3 billion KRW and 310.4 billion KRW. Even 4th Industrial Revolution funds, composed of sectors gaining attention this year, saw outflows of 39.3 billion KRW and 17 billion KRW, and gold funds, a safe asset, had outflows of 13.2 billion KRW and 4.9 billion KRW, highlighting the notable net inflow trend of TDFs.

In terms of returns, TDFs are not lagging behind other thematic funds. Based on one-year returns, TDFs posted 12.61%, slightly trailing gold funds (23.68%) but outperforming dividend stock funds (6.04%) and leverage funds (13.51%).

Oh Kwang-young, a researcher at Shin Young Securities, said, "Each TDF has various characteristics such as different management strategies and investment assets. Also, since it is a very long-term investment product, investors should carefully review each fund’s management strategy, investment targets, portfolio, and asset allocation status by considering macroeconomic variables, long-term outlook, domestic and international government policies, and global fund capital flows, and invest according to their own portfolio situation."

This content was produced with the assistance of AI translation services.