Samsung Asset Management Presents 'Hybrid' Pension Strategy for the Second Half

As uncertainties in the macroeconomic environment for the second half of the year are increasing, such as the continuation of high interest rates and a strong won-dollar exchange rate, Samsung Asset Management has presented a hybrid strategy for pension investments in the second half.

On July 7, Samsung Asset Management announced a hybrid pension strategy utilizing the 'Samsung Korea EMP Qualified TDF 2060' as an investment strategy to enhance the efficiency of second-half pension portfolios. This product became the first of its kind to be sold in the banking sector, with sales starting at NH Nonghyup Bank on this day.

Recently, among savvy investors, a key trend for pension management in the second half of the year is shifting away from the conventional approach of locking funds into a single global Target Date Fund (TDF) and instead actively rebalancing portfolios in response to market conditions through 'selective rebalancing.'

The hybrid strategy proposed by Samsung Asset Management involves investing 50% of assets in a 'global TDF' to secure stable returns as a core long-term asset, while the remaining 50% is allocated to the 'Samsung Korea EMP Qualified TDF,' which specializes in domestic assets, as a satellite asset. The basic approach is to maintain global diversification, but when the Korean stock market enters a historically undervalued phase or is expected to benefit from value-up policies, the allocation to the Korea TDF can be strategically increased to turn market volatility in the second half into an opportunity for excess returns.

In particular, since this product invests 100% in won-denominated assets, it is not exposed to foreign exchange risk and incurs no currency conversion or hedging costs. Ultimately, it serves as the most effective inflation (price increase) hedge and a safety net for preserving long-term compounding returns for Korean investors who will spend in won after retirement. In addition, given that Korean investors typically need to cover all post-retirement expenses in won, this product also helps address the 'real purchasing power mismatch risk' (the gap between asset value and actual living costs) that can result from a globally focused portfolio, and acts as a supplement to hedge against domestic inflationary pressures.

The most powerful tool for investors restructuring their pension investment portfolios in the second half is, without a doubt, whether the product meets the requirements of a 'qualified TDF.' Under the current defined contribution (DC) and individual retirement pension (IRP) systems, equity risk assets can only be included up to 70% of the account, with the remaining 30% having to be allocated to principal-guaranteed or bond-type products. However, the Samsung Korea EMP Qualified TDF, which has received regulatory approval, allows investment of up to 100% within this 30% safe asset allocation.

This product, now available for the first time in the banking sector at NH Nonghyup Bank, has significantly improved investor accessibility. It is also available through major financial institutions, including securities firms (Samsung, KB, NH Investment & Securities, Kyobo, Shinhan Investment, Woori Investment, Hana, Korea Investment & Securities, Hyundai Motor Securities) and insurance companies (Samsung Life Insurance, Hanwha Life Insurance).

Jeon Yongwoo, Head of the Pension OCIO Division at Samsung Asset Management, said, "Pension investing requires a balanced perspective that anchors to global diversification for the long run, while capturing domestic asset cycles to maintain real purchasing power without taking on currency risk." He added, "The hybrid strategy will be the smartest solution to maximize the benefits of long-term compounding returns."

This content was produced with the assistance of AI translation services.