Hanwha Asset Management: "REITs, High Dividends, and TDFs Are Perfect for a Secure Retirement"

Hanwha Asset Management has unveiled a portfolio that allows individuals to prepare for a secure retirement through pension savings and Individual Retirement Pension (IRP) accounts. With the tax deduction limit increased to a combined maximum of 9 million KRW for pension savings and IRP starting from this year's year-end tax settlement, this presents an opportunity for investors interested in pension investments.

On the 26th, Hanwha Asset Management recommended products including listed REITs, high-dividend ETFs (Exchange-Traded Funds), and TDFs (Target Date Funds). The portfolio is composed of assets suitable for preparing a safe retirement. Specifically, the recommended products include ▲Hanwha REITs ▲ARIRANG High Dividend Stocks ▲LIFEPLUS TDF 2035, 2040, and 2045.

First, TDFs, which recently surpassed 11 trillion KRW in net assets and are showing rapid growth, are indispensable products in pension investments. As of the first quarter of this year, pension assets account for 92.3% (10.1 trillion KRW) of the 11 trillion KRW in TDF net assets. This is attributed to investors' positive response to the adjustment of the ratio between risky and safe assets according to the life cycle and retirement timing.

Among 222 TDF products of all vintages registered with FnSpectrum, as of December 21 this year, the recent 5-year returns (for 104 products with measurable 5-year returns) show that 'HanwhaLifePlusTDF2045' ranks 3rd with 56.46%, 'HanwhaLifePlusTDF2040' ranks 6th with 54.44%, and 'HanwhaLifePlusTDF2035' ranks 13th with 49.42%. Three Hanwha Asset Management TDF products are within the top 15 based on 5-year returns.

High-dividend ETFs are also gaining attention as products that, when invested through pension accounts, allow deferral of dividend income tax and receipt of investment funds later at a lower pension income tax rate. When investing through a general account, a 15.4% dividend income tax is withheld on ETF dividends (distributions). However, if invested for more than 5 years through pension savings or IRP accounts and withdrawn after age 55, a lower pension income tax rate of 3.3% to 5.5% applies.

'ARIRANG High Dividend Stocks' paid a dividend of 730 KRW per share in April, achieving a 6.03% dividend yield, ranking first among domestic equity ETFs in dividend yield. The dividend yields over the past five years were 6.03% in 2023, 5.51% in 2022, 4.81% in 2021, 5.51% in 2020, and 4.29% in 2019. As of the 21st, this ETF's net asset value reached approximately 202.4 billion KRW, making it a representative high-dividend ETF.

Listed REITs, which have been available for investment through pension accounts since last year, are also among the products that can provide stable dividend income, as they are required to distribute more than 90% of their distributable profits annually. Hanwha REIT, listed on March 27, is expected to achieve an annual average dividend yield of 6.85%. As a sponsor REIT, it incorporates a large number of Hanwha Group assets and secures them as tenants, reducing vacancy concerns. Hanwha REIT, which holds only domestic office assets, shows a steady stock price trend compared to other listed REITs affected by overseas real estate crises.

Chae On, Head of the REIT Investment Division at Hanwha Asset Management, stated, "Unlike real estate funds that seek fee income through repeated buying and selling, REITs pursue continuous dividends through stable management. Hanwha REIT offers stable dividends from a long-term investment perspective of 10 to 20 years with low risk and moderate returns, making it recommended for pension investments."

Choi Young-jin, Head of Strategic Business Division at Hanwha Asset Management, said, "With the tax deduction limit for pension savings and IRP expanded to a maximum of 9 million KRW starting this year, it is necessary for salaried workers to contribute as much as possible within their personal capacity by the end of the year to secure benefits. Especially, it is important to accumulate future retirement assets from a long-term perspective by considering profitability and stability through TDF or REIT products from companies with proven long-term performance."

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