The retail tranche of the Public Growth Fund targets 600 billion won ($396 million) this year, with KB Asset Management raising 200 billion won as one of 10 selected managers.
The vehicle is the public-facing piece of one of President Lee Jae Myung’s signature economic initiatives.
Overseen by the Financial Services Commission, the Public Growth Fund aims to channel 150 trillion won into 12 advanced strategic industries over five years, including 30 trillion won in 2026. It anchors the administration’s “productive finance” agenda — redirecting household savings out of deposits and real estate into the real economy. Lee has described the retail fund as “priming water” for future industries and household asset formation.
The retail fund combines 600 billion won from the public with 120 billion won in government money earmarked to absorb losses, repeating annually for five years to build a cumulative 3 trillion won pool.
Capital is funneled into a master fund-of-funds structure allocating across sub-funds managed by 10 firms, with investors sharing returns equally regardless of which manager they subscribe through.
Each sub-fund must invest at least 60 percent of assets in strategic sectors and at least 30 percent in new funding for unlisted companies and firms on the tech-heavy KOSDAQ market. The structure targets growth-stage companies rather than large KOSPI names, aiming to bridge the “death valley” many deep-tech firms face when scaling commercially.
The tax benefit is the centerpiece of the offering. Investors holding the fund for at least three years can claim income-tax deductions based on investment size — 40 percent up to 30 million won, 20 percent between 30 million won and 50 million won, and 10 percent between 50 million won and 70 million won — allowing a maximum 18 million won deduction on a 70 million won investment.
Dividend income will be taxed separately at 9.9 percent, below the standard 15.4 percent rate. Regulators set a benchmark annual return target of 6 percent, while cautioning that actual returns remain uncertain.
Eligibility requires a dedicated account open to residents aged 19 or older, or wage earners aged 15 and older, with a five-year investment cap of 200 million won. Individuals subject to comprehensive financial income taxation during the previous three years are excluded.
The fund is structured as a closed-end vehicle with a mandatory five-year lockup and no early redemption. Units are expected to list within 90 days after the fund’s June 12 establishment date, although regulators warned secondary-market liquidity could remain thin. Selling within three years would also void the tax benefits.
The government and fund managers will absorb losses of up to roughly 20 percent at the sub-fund level, though authorities stressed the buffer applies only to the public-investment portion rather than fully protecting investor principal.
The design reflects lessons from the disappointing performance of the previous Moon Jae-in administration’s New Deal Fund, which struggled with rigid investment rules, weak returns and limited exit opportunities. Authorities extended the investment horizon to five years and diversified sub-funds by size in an effort to improve flexibility and performance.
The fund is being sold on a first-come, first-served basis through 10 banks and 15 brokerages. A priority subscription window for wage earners making 50 million won or less annually runs through June 4 before general subscriptions close June 11.
Applications for the broader 150 trillion won strategic-industry program have already exceeded targets by roughly 20 trillion won, leaving regulators to watch whether retail demand can match the institutional rush.
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