The National Participation Growth Fund, launched in June, reported an initial return of 0.5%. While most of the underlying private equity funds recorded negative performance, the government’s financial backing and the fund managers’ capital absorbed the losses first, allowing the returns for general investors to remain positive.
On October 26, the Financial Services Commission and asset management industry reported that Mirae Asset, Samsung, and KB Asset Management, the fund managers for the first public offering of the National Participation Growth Fund, released their first asset management report. This report covers the fund's performance from its establishment on June 12 until September 11, a period of approximately three months.
According to the report, the cumulative return for the 10 underlying private equity funds was a total of negative 6.48%. In contrast, the cumulative return for the senior tranche of the National Participation Growth Fund was 0.47%. Adding liquidity interest income of 0.03 percentage points, the final return for the public offering fund was 0.50%.
The National Participation Growth Fund invests in senior equity securities issued by 10 private equity funds. The government’s financial resources and the fund managers’ capital are invested in a subordinate position, meaning they absorb losses first. If losses exceed the subordinate investment limits of each private equity fund, losses will also occur in the senior tranche.
In fact, five of the 10 private equity funds recorded negative returns since their establishment. The Midas National Growth Advanced Strategy was the worst performer at -19.86%, followed by Mirae Asset National Participation Growth at -18.10%, The J KOSDAQ Venture National Growth at -11.04%, DS National Participation Innovative Growth at -5.79%, and Life National Growth Growth Capital at -4.67%.
Among these, only Midas experienced actual losses in the senior tranche. The Midas National Growth Advanced Strategy recorded a senior return of -2.37% as the losses of the underlying fund exceeded the subordinate loss absorption limit.
The senior returns for Mirae Asset National Participation Growth at -18.10% and The J KOSDAQ Venture National Growth at -11.04%, along with DS and Life funds, all recorded 0% due to the prior absorption of losses by the subordinate investments.
The remaining five private equity funds generated positive returns. The Orion National Growth Stepping Stone Fund had the highest return at 3.15%, followed by Timefolio KOSDAQ Venture National Growth at 2.30%, Susung National Growth KOSDAQ Venture at 1.93%, KB National Growth Participation at 0.60%, and Korea Value Advanced Strategy Industry National Growth at 0.21%.
Currently, the total investment ratio of all private equity funds is 46.3%, with approximately 80% of the invested amount, excluding cash assets, allocated to advanced strategy industries. The proportion of cash assets is 49.7%. The asset distribution includes 28.4% in listed stocks, 10.1% in listed mezzanine, 0.7% in unlisted stocks, and 4.6% in unlisted mezzanine.
The Financial Services Commission noted that the National Participation Growth Fund is a closed-end fund with a five-year maturity and invests not only in listed stocks but also in unlisted stocks and mezzanine. Therefore, it is necessary to evaluate the management performance from a long-term perspective rather than focusing solely on current returns.
The public offering fund managers stated in the asset management report, "The assets included in the overall portfolio are well diversified, and each underlying private equity fund is leveraging its competitiveness to diversify investments beyond listed stocks into unlisted stocks and mezzanine. We will thoroughly monitor key operational aspects such as asset inclusion and ratios in accordance with our private equity monitoring and risk management procedures."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.