The fund, designed to invest in advanced industries such as artificial intelligence (AI) and semiconductors as part of President Lee Jae Myung's push to shift household assets away from heavy reliance on real estate and into the stock market, attracted strong demand from retail investors, who were drawn by tax incentives and a government-backed loss-sharing structure.
Online offerings at some brokerages sold out within several minutes after sales began at 8 a.m., with banks and securities firms also seeing heavy demand both on mobile apps and in person.
"We opened nearly 10,000 accounts for the fund in a single day," a staffer at a major brokerage in central Seoul said. "This morning alone, all online offerings were sold out within just 10 minutes."
The staffer added that crowds had begun gathering early in the morning to open accounts for the fund, forming long waiting lines.
Another brokerage also saw more than one-fifth of its 20 billion won ($14.5 million) allocation sold online within minutes after sales began at 8 a.m.
Major banks including Shinhan and Woori said their mobile allocations sold out in the morning, while some branches saw customers lining up even before opening hours to sign up for the fund.
"It feels more reliable because the government is involved," said a woman surnamed Bae in her 50s who visited a Korea Investment & Securities branch in Seoul's financial district of Yeouido to sign up for the fund. She said the product appealed to her because it was easier to manage alongside her daily job than short-term stock trading.
"It feels more secure because the government is involved," said a woman in her 50s surnamed Bae, who visited a Korea Investment & Securities branch in Seoul's Yeouido financial district to sign up for the fund. She said the product also appealed to her because it was easier to manage alongside her daily job than short-term stock trading.
The fund will be sold on a first-come, first-served basis over the next three weeks until June 11. To qualify for tax benefits, investors must be at least 19 years old and open a dedicated account used exclusively for the fund. Those who have been subject to South Korea's comprehensive income tax at least once in the past three years are not eligible to open such accounts.
The fund aims to raise 600 billion won (US$435 million) from retail investors, along with 120 billion won in government funding. The combined assets will be allocated across 10 separate funds investing in strategic industries, with the government covering up to 20 percent of losses, though investors can still lose money.
Financial regulators warned that the fund is a high-risk investment product, requiring investors to pass suitability assessments before investing.
Despite the risks involved, demand appeared to surge as the fund offers tax benefits such as dividend income and income tax deductions.
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