Last Year TDF Grew 56.8%... Yield 9.7%

[Asia Economy Reporter Junho Hwang] The target-dated fund (TDF) market experienced significant growth last year.

According to the TDF market trend analysis by the Korea Financial Investment Association on the 22nd, the TDF assets under management reached 5.2 trillion KRW at the end of last year, a 56.8% increase compared to 3.3 trillion KRW at the end of the previous year. In particular, the amount of funds flowing in from retirement pensions doubled annually, reaching 3.02 trillion KRW (61.6%).

The suitability of TDFs has shown lower volatility compared to the stock market over the past three years (2019?2020). This indicates that they have been generating stable returns in the long term. During last year’s bull market, the average one-year return of TDFs was 9.7%. They achieved excellent returns by tracking domestic and international indices in a rising market (MSCI: 14.3%). Conversely, during the stock market correction in 2018, the average one-year return of TDFs was -7.4%, demonstrating superior defensive capability compared to the market decline (MSCI: -11.2%).

TDFs are designed with a global asset allocation structure that generates returns during bull markets, manages risk through diversification during corrections, and automatically lowers volatility as the retirement date approaches. Considering that pension subscribers in Korea have recently become more sensitive to returns, leading to a full-scale shift of pension money into performance-based products, the TDF market is expected to continue growing in the future.

Oh Mooyoung, Head of the Industry Strategy Division at the Korea Financial Investment Association, stated, "TDFs are a proven management method that allows general investors to enjoy the performance of global capital markets. Utilizing TDFs as a long-term, diversified investment tool from a life-cycle perspective will greatly help in securing stable retirement funds."

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