IPO 'Ttasang' IPO Fund 'Naksu'

Public Offering Stock Craze Spurs Launch of IPO Funds
Easy Investment with Small Capital Possible

[Image source=Yonhap News]

[Asia Economy Reporter Junho Hwang] Last month, the amount raised through initial public offerings (IPOs) reached its highest level in 11 years, leading to the successive launch of IPO stock funds this month. These products aim to absorb investment funds by riding the IPO craze. From an investor's perspective, they can enjoy the benefits of investing in IPO stocks without directly investing in them.

IPO Stock Funds Launched One After Another

KB Asset Management began selling the ‘KB KOSDAQ Venture Company IPO Stock Fund No. 3’ starting on the 13th. This is the fourth IPO stock fund launched this month and the fifth since the beginning of this year. Only one IPO stock fund was launched between January and April last year. These products are designed to capitalize on the IPO boom that has been gaining momentum this year. Approximately 2 trillion KRW has flowed into IPO stock funds launched since the beginning of this year. As interest in IPOs rises due to the bullish stock market, IPO stock funds are also experiencing favorable conditions.

Last month, the number of companies going public reached 12, the highest in 21 years, and the amount raised totaled 1.8149 trillion KRW, the highest level in 11 years. The market capitalization at the time of listing last month was also recorded at 6.8744 trillion KRW, the largest in 11 years. Jaejin Ha, Executive Director of the Pension WM Division at KB Asset Management, said, "The recent average price-earnings ratio of IPO stocks is at an all-time high," adding, "With major IPOs such as Kakao Pay, Kakao Bank, and Krafton scheduled this year, high interest in IPO stocks is expected to continue."

Wider Range of Choices

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As IPO stock funds are launched one after another, investors now have a wider range of choices. IPO stock funds invest in IPO stocks using funds collected from investors. Although there are restrictions on the proportion of IPO stock investments, they allow investment with a small amount of money and offer the advantage of benefiting steadily from IPO stocks.

An industry insider from asset management said, "IPO stock funds have the advantage of diversification since only a portion of assets is invested in IPO stocks. Also, subscribing directly to IPO stocks involves complicated subscription procedures, but these funds allow investment without such procedures." The Asset One KOSDAQ Venture REIT (with assets under management of 205.5 billion KRW), launched in April last year, has shown a current return of 30.59% as of the 7th. The average return of all IPO stock funds since the beginning of the year is about 2.53%.

However, investors aiming for high returns early on and planning to exit quickly might find direct investment preferable. According to Eugene Investment & Securities, among the 12 companies listed last month, excluding SPACs and re-listings, the initial return based on the IPO price was 74.0%. The average return based on the current stock price (closing price at the end of last month) compared to the IPO price was 59.4%.

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