"Jangsu Fund Draws Attention for Differentiated Returns and Stability"

Among funds with assets under management exceeding 50 billion KRW, long-established funds that have been active for over 10 years since their inception recorded returns that overwhelmingly outperformed benchmark indices. These long-established funds also exhibited relatively lower volatility, attracting attention for combining profitability and stability in long-term investments.

KCGI Asset Management analyzed the performance of 45 domestic equity funds (with assets under management of 50 billion KRW or more and a duration of over 10 years), excluding index-linked funds, out of 668 funds established since 2001.

A KCGI Asset Management official explained, "The average cumulative return by inception year for long-established funds reached as high as 816% (in 2002). This means that if you had invested 100 million KRW in a long-established fund set up in 2002, it would have grown to 910 million KRW this year."

For relative comparison, when converting cumulative returns to annualized compound returns, the annualized return of long-established funds was 7.4%, surpassing the 4.0% annualized return of benchmark indices such as the KOSPI 200 during the same period. Funds with assets under 50 billion KRW recorded an annualized return of 5.9%, while funds with assets under 50 billion KRW and a duration of less than 10 years posted an annualized return of 4.7%.

The probability of loss was also lower for long-term investors. As of the end of August, all 45 long-established funds recorded positive returns since inception, and 40 funds outperformed their benchmark indices.

The official noted, "A noteworthy point is that long-term performance over three years or more has been strong. While only 20 out of 45 funds outperformed the benchmark in one-year performance, 37 funds, or 82%, exceeded the benchmark over five years." He added, "Since inception, 40 funds, or 89%, have delivered better performance than their benchmarks, demonstrating the value of long-term investing."

Among long-established funds, general equity funds accounted for the largest share in terms of assets under management and number of funds. General equity funds held 4.0877 trillion KRW, representing 58% of all long-established funds. Funds investing in theme stocks favored by individual investors accounted for 695.4 billion KRW, about 10%, while small and mid-cap equity funds investing in small and mid-sized companies accounted for only 263.2 billion KRW, or 4%.

KCGI currently manages the 12-year-old KCGI Korea Securities No.1 fund with an annualized return of 7.66% and the 11-year-old KCGI Korea Retirement Pension fund with a return of 6.21%.

Kim Hong-seok, Head of Equity Management at KCGI Asset Management, explained, "The performance of long-established funds is due to trained managers adhering well to principles in asset allocation, stock selection, and trading from a long-term investment perspective."

He added, "While index-linked funds or ETFs buy and sell strictly according to their weights during periods of market overheating or excessive declines, active funds operate based on comprehensive judgment and principles of the fund managers, allowing them to pursue excess returns."

Kim emphasized that active funds may be more advantageous than index-linked ETFs or passive funds for long-term investing.

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