Hanwha Asset Management, Full-Scale Attack on Pension Market with LIFEPLUS TDF

TDF, Expected to Grow to 35 Trillion Won in the Next 5 Years

[Asia Economy Reporter Minji Lee] Hanwha Asset Management announced on the 15th that all products in the Hanwha LIFEPLUS TDF series, a target-dated fund (TDF) product, ranked within the top 1 to 3 in year-to-date returns among similar funds as of the end of November.

A TDF is a fund that uses the customer's retirement date as the basis for asset allocation decisions. When the retirement date is far away, it increases the proportion of risky assets such as stocks for aggressive management, and as the retirement date approaches, it shifts to a defensive strategy by increasing the proportion of safe assets such as bonds.

According to Zeroin, the ‘Hanwha LifePlus TDF 2045 Fund’ posted a year-to-date return of 16.87% (as of November 23, 2021), ranking first among 14 funds of the same vintage (target retirement date) and class.

Similarly, the ‘Hanwha LifePlus TDF 2035 Fund’ ranked first among 17 similar funds with a year-to-date return of 15.91%. Additionally, the ‘Hanwha LifePlus TDF 2050 Fund,’ another vintage, ranked third among 15 similar funds with a year-to-date return of 17.17%. The ‘Hanwha LifePlus TDF 2025 Fund’ and ‘Hanwha LifePlus TDF 2020 Fund’ also ranked second and first among 12 and 4 funds, respectively.

Hanwha Asset Management analyzed that these results are due to excellent asset allocation capabilities and differentiated currency strategies. The Hanwha LifePlus TDF series allocated about 40% of the total portfolio to U.S. and European stocks, and earnings from these regions contributed to the fund’s outstanding performance.

Moreover, considering the characteristics of the Korean market, the strategy of not implementing currency hedging when investing in overseas stocks was also effective. Hanwha Asset Management noted that the won-dollar exchange rate and the stock market have a complementary relationship. This year, the dollar’s significant appreciation against the won acted as an additional performance factor.

With the recent agreement on the default option bill for retirement pensions at the National Assembly plenary session, the TDF market is expected to grow significantly. The default option is a pre-designated operation system for retirement pensions, where if a retirement pension subscriber does not give separate investment instructions, the pension is invested in financial products (such as TDFs) pre-designated by the retirement pension provider.

Looking at the example of the United States, where the default option was introduced first, the TDF market has recorded an average annual growth rate of over 25% since the introduction of the default option. Applying this to the Korean market, the current TDF market size of 10 trillion won is expected to grow to 35 trillion won within the next five years.

Hanwha Asset Management is focusing its internal capabilities on targeting the pension market by establishing related divisions such as the Personal Solutions Headquarters in response to this pension market growth. Byun Jae-il, head of the WM Solutions Management Team at Hanwha Asset Management, said, “TDF is a representative solution fund that aligns investment objectives with the customer’s life cycle rather than the market.” He added, “Hanwha LifePlus TDF focuses on selecting the most appropriate investment strategy based on principles and reasonable grounds that have been verified over a long period in the capital market.”

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