'KB On Gukmin TDF' Lowers Fees... Industry's Lowest Level

[Asia Economy Reporter Junho Hwang] KB Asset Management has lowered the management fees for target date funds to the industry's lowest level.

On the 24th, KB Asset Management announced that it reduced the management fee of the 'KB On Gukmin TDF' by 0.07 percentage points. The management fee for KB On Gukmin TDF 2020 was lowered from 0.22% per year to 0.15%. As a result, the total fee dropped to 0.56% per year (based on the C-Retirement class), the lowest in the industry. This is the lowest fee among the top five TDF management companies.

KB On Gukmin TDF is a fund that invests most of its assets in Vanguard's index funds (ETFs), which are known for their low fees. Vanguard holds a 37% market share and ranks first in the industry by leveraging its low fees.

Due to the long-term nature of pension investments, even small differences in fees can lead to significant compound interest effects. Since most TDFs are fund-of-funds, it is important to carefully examine the synthetic total fees, which include the costs of the underlying funds. The synthetic total fee of KB On Gukmin TDF is 1.06% per year, which is more than 0.5% cheaper on average compared to other companies. A 0.5% difference in synthetic total fees can result in an additional profit of 68.65 million KRW after 40 years due to compound interest effects, assuming a new employee with an annual salary of 30 million KRW (with a 5% annual salary increase and an average expected annual return of 4%) invests 10% of their salary every year.

Since the appointment of CEO Hyunseung Lee last year, KB Asset Management has focused on targeting the pension market, and the net assets of the KB On Gukmin TDF series are on the verge of surpassing 1 trillion KRW. The performance is also outstanding, with KB On Gukmin TDF 2055 achieving a 23.53% return over one year last year, ranking first among all TDF products.

Youngsung Kim, Executive Director of Global Operations at KB Asset Management, said, "Not only the largest target date fund (TDF) among asset allocation-type pension products but also the target income fund (TIF) and target return fund (TRF) markets are targets for fee reduction." He added, "We plan to conduct aggressive marketing based on a solid lineup of pension products."

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