KCGI Target Conversion Bond Mixed Fund No. 3 Subscription Open

Published 12 Aug.2025 10:15(KST)

KCGI Asset Management announced on August 12 that it will be accepting subscriptions for the 'KCGI Target Conversion Bond Mixed Fund No. 3' until August 25.

As with its previously launched target conversion funds, this fund invests more than 50% in bonds and up to 30% in equities. Once the target return of 6% is achieved, the fund is converted into a bond fund.

The target conversion bond mixed funds have recently gained popularity as market interest rates have dropped to the 2% range, signaling a shift to a low interest rate environment, and as expectations of stock price increases have risen following the passage of the Commercial Act amendment and the anticipated resolution of the Korea Discount.

KCGI Asset Management attracted 56 billion won to its Target Conversion Bond Mixed Fund No. 1 and 276.8 billion won to No. 2. The fund invests more than 50% in high-quality bonds, such as government bonds, monetary stabilization bonds, high-grade financial bonds, and corporate bonds (rated AA- or above for bonds and A1 or above for commercial paper), and up to 30% in domestic equities, aiming to ensure stability while pursuing excess returns. As a bond mixed fund, it is managed with an investment grade of Level 4 (moderate risk).

After achieving the target return of 6%, all equity assets are sold and the fund is converted into a bond fund that invests only in bond-related assets. The fund name is also changed to 'KCGI Korea Target Conversion Securities Investment Trust [Bond] No. 3', and the investment grade is changed to Level 5 (low risk).

A KCGI Asset Management representative stated, "We plan to secure stable returns by including high-quality bonds and to achieve the target return early by leveraging the management experience of the KCGI Korea Fund in the equity segment."

The fund can only be subscribed to during the offering period and cannot be purchased after the subscription period ends, as it is a closed-end fund. While closed-end funds generally restrict redemptions before the target is achieved after the subscription period, this fund does not charge a redemption fee for early redemptions, making fund management more convenient.