Korea Investment Management's TDF Araseo ETF Focus Fund Grows by 100 Billion KRW in Two Months

Published 23 Jan.2025 08:51(KST)

Korea Investment Management announced on January 23 that the total assets under management for the Korea Investment TDF Araseo ETF Focus Fund series have surpassed 300 billion KRW.

According to FnGuide, as of the closing price on January 22, the assets under management for the Korea Investment TDF Araseo ETF Focus Fund series stood at 314.5 billion KRW, an increase of more than 250 billion KRW compared to the end of 2023.

A target date fund (TDF) is designed to automatically adjust its asset allocation based on the target retirement date (vintage). In the early stages, the fund maintains a higher proportion of equities, gradually increasing its allocation to bonds over time to achieve stable performance. With the implementation of the default option, capital inflows have risen, and the TDF market has grown to approximately 12 trillion KRW at the beginning of this year, establishing itself as a leading product for retirement investment.

The stable and strong returns of the Korea Investment TDF Araseo ETF Focus Fund series appear to have contributed to increased capital inflows. Based on the retirement pension online class data as of January 22, the six-month returns for this fund series ranged from 7.68% to 10.30%, and the one-year returns ranged from 14.79% to 25.20%, ranking first across all vintages.

The fund series also posted excellent results in the Sharpe ratio, a representative measure of risk-adjusted returns. The Sharpe ratio, which represents return per unit of risk, is especially important for long-term investments such as retirement plans, as a higher value indicates lower volatility. The six-month Sharpe ratio for the Korea Investment TDF Araseo ETF Focus Fund series ranged from 1.37 to 1.56, and the one-year Sharpe ratio ranged from 2.17 to 2.38, ranking first across all vintages since launch.

The Korea Investment TDF Araseo ETF Focus Fund series is based on the core investment philosophy of the Long-Term Capital Market Assumption (LTCMA), tailored for domestic investors. The asset allocation strategy primarily invests in U.S. growth stocks and domestic bonds, and is managed with currency exposure. As its name suggests, the fund series focuses on exchange-traded funds (ETFs), aiming for low risk, low turnover, and low costs, with a particular emphasis on improving compound returns, which are crucial for retirement investing.

The Korea Investment TDF Araseo Gold 2080 Fund, the only 2080 vintage available in Korea, has set its initial allocation to risk assets at 99%. This reflects a differentiated strategy to meet diverse retirement investment needs.

Online class inflows for this fund series have also been notable. As of the end of last year, the increase in online class subscriptions was 186.5 billion KRW year-on-year, the highest among all domestic TDF series. Thanks to its differentiated management strategy, ability to meet retirement investor needs, and the popularity of its online class, the fund series has grown to 300 billion KRW within two years of launch and is considered to have successfully established itself in the TDF market.

Park Heeun, Executive Director of the Solution Division at Korea Investment Management, stated, "TDFs are representative asset allocation products that are efficient for managing retirement assets," adding, "We will continue to launch retirement-focused funds such as Korea Investment TDF Araseo Gold 2080." He further commented, "We will continue our efforts to develop products and solutions for retirement investors based on Korea Investment Management's unique strategies."

The Korea Investment TDF Araseo ETF Focus Fund series is available through a total of 22 distributors, including Korea Investment & Securities, KB Kookmin Bank, and Shinhan Bank.