Second 'People's Growth Fund' to launch Sept. 30 with W600b target

On sale for 10 business days through Oct. 15

300 billion won reserved for low-income investors in first week

First-round investors barred from re-enrolling; income deduction of up to 18 million won

The Financial Services Commission office at Government Complex Seoul in Jongno-gu, Seoul [Yonhap]

The second round of the People's Participation Growth Fund will go on sale Sept. 30, targeting 600 billion won ($447 million) — the same size as the first round. Investors can subscribe through 24 financial institutions, including 10 banks and 14 brokerages.

According to the Financial Services Commission, the fund will be sold on a first-come, first-served basis over 10 business days from Sept. 30 through Oct. 15. Sales may close early if the 600 billion won target is reached before the deadline.

The 600 billion won raised from the public will be combined with 120 billion won in subordinated government fiscal contributions, bringing the total to 720 billion won to be committed across 10 sub-funds. Three asset managers — Mirae Asset Global Investments, Samsung and KB — will run the public offering funds, which will then distribute the capital among the 10 sub-funds responsible for actual investment.

For the large-cap sub-funds, DS Asset Management and Korea Investment Value Asset Management were selected. Brain Asset Management, KB Asset Management, Quad Asset Management and Truston Asset Management will manage the mid-cap sub-funds, while DB Asset Management, NH Hedge Asset Management, Taurus Asset Management and Hana Asset Management will handle the small-cap sub-funds.

Each of the two large-cap sub-funds will receive 120 billion won, each of the four mid-cap sub-funds 80 billion won, and each of the four small-cap sub-funds 40 billion won. Regardless of which of the three public offering funds an investor chooses, all will be exposed to the same portfolio of 10 sub-funds and will therefore earn identical returns.

The funds will invest in companies in advanced strategic industries — semiconductors, secondary batteries, biotech, AI, defense and robotics — as well as related businesses. Each sub-fund must allocate at least 60 percent of its committed capital to these primary investment targets, with at least 30 percent of that going to unlisted companies and Kosdaq technology-exception-listed firms through new capital injections.

The fund will be sold through 10 banks — Kookmin, IBK, NH NongHyup Bank, Shinhan, IM, Woori, Hana, Gyeongnam, Gwangju and Busan Bank — and 14 brokerages, including KB, NH, Daeshin, Meritz, Mirae Asset, Samsung, Shinhan Investment, IM, Yuanta, Hana, Korea Investment, Hanwha Investment, Woori Investment and Kiwoom Securities. Woori Investment Securities and Kiwoom Securities will sell exclusively online.

In the first week, half of the total offering — 300 billion won — will be set aside exclusively for low-income investors. The first-round fund reserved only 20 percent of its total for that group, but the allocation was raised after low-income investors accounted for roughly 35 percent of actual first-round sales. The fact that about 61 percent of young subscribers met the low-income threshold was also taken into consideration. Any unsold low-income quota at the end of the first week will be opened to all investors from the second week onward.

Online sales will also be capped in the first week: banks may sell up to 40 percent of their allotment online, and brokerages up to 60 percent. The restrictions will be lifted from the second week. The measure is intended to ensure that customers visiting branches in person have a fair chance to subscribe.

Customers who actually invested in the first People's Participation Growth Fund are not eligible to subscribe to this second offering. Those who opened a dedicated account during the first round but did not make an actual investment may still participate.

To receive tax benefits, investors must use a dedicated People's Participation Growth Fund account. Depending on the amount invested, an income deduction of up to 18 million won is available, and dividend income will be subject to a separate flat tax of 9.9 percent for up to five years from the date of investment. However, anyone who was subject to comprehensive financial income taxation at least once between 2023 and 2025 will be barred from opening a dedicated account.

The annual subscription limit for the dedicated account is 100 million won, with a maximum of 200 million won over five years. For a standard account without tax benefits, the annual limit is 30 million won.

The fund is a closed-end product with a five-year maturity, meaning mid-term redemptions are not permitted. Once listed on an exchange after launch, units may be traded, but liquidity may be low and prices could fall below net asset value. Investors who transfer their holdings within three years of purchase will have the tax benefits — income deductions and the preferential separate taxation on dividend income — clawed back.

The subscription process has also been streamlined. During the first round, applicants had to obtain and submit an income verification certificate themselves through the National Tax Service's Hometax portal or the Government24 platform. For the second round, financial institutions will be able to verify income directly through public MyData services with the applicant's consent.

Meanwhile, the first People's Participation Growth Fund went on sale May 22 and sold out its entire 600 billion won quota by the morning of May 29, one week later. A total of 30,258 investors subscribed.

The 10 sub-fund managers for the first round were DS Asset Management, Mirae Asset Global Investments, Life Asset Management, Midas Asset Management, Timefolio Asset Management, Korea Investment Value Asset Management, The J Asset Management, Susung Asset Management, Orion Asset Management and KB Asset Management. Of those, three — DS Asset Management, Korea Investment Value Asset Management and KB Asset Management — have been reselected to manage sub-funds in the second round.

rim@heraldcorp.com