The Financial Services Commission said on the 6th that the Public Participation Growth Fund will be sold for three weeks, from the 22nd through the 11th of next month, through branches and online channels of 25 banks and securities firms. Total sales to individuals will be 600 billion won, offered on a first-come, first-served basis until the allocation is exhausted. The annual subscription cap is 100 million won per person. Minimum subscriptions vary by seller, ranging from 0 to 1 million won. Investors should be cautious because early redemption is not allowed during the five-year term.
Tax support is the fund’s biggest draw. Investors can claim income deductions up to 18 million won: a 40% deduction rate on investments up to 30 million won, 20% on amounts over 30 million won up to 50 million won, and 10% on amounts over 50 million won up to 70 million won. Dividend income is separately taxed at 9% if the investment is held for five years.
The main investment targets are companies in advanced strategic industries — including semiconductors, future vehicles and artificial intelligence — and related firms. Ten sub-fund managers operating under the National Growth Fund must invest at least 60% of their committed capital in those areas. The remaining 40% may be invested at the managers’ discretion.
The fund aims to channel private money into future growth industries, but critics warn it could repeat the familiar limits of policy funds, given that similar products in the past fell short of expectations.
As an example, the average annual return for the general public on the New Deal fund launched in 2021 under the Moon Jae-in government was 2.37%, roughly in line with bank deposit rates. That figure reflected the government budget taking losses first; excluding fiscal funds, the average return of 10 sub-funds was just 0.75%.
The structure that ties up money for years is also similar. The New Deal fund had a four-year maturity, while the National Growth Fund has a five-year term and bars redemptions. If an investor transfers the holding within three years, an amount equivalent to the tax benefit will be clawed back.
Some also question whether the fund’s target return — 30% cumulatively over five years — will look compelling given the KOSPI’s 56.6% rise over the past four months. With the KOSPI topping 7,300 on the day, some analysts said investors may worry about buying in near a peak.
Na Hye-young, director of the FSC’s Public and Regional Participation Support Division, said the government sought to improve on the New Deal fund by diversifying sub-fund strategies and methods. “Within a 20% range, fiscal funds will take losses first for each sub-fund, and tax benefits are provided, which has the effect of increasing investors’ net returns,” she said.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.