Public Participation Growth Fund Posts 0.5% Return in 3 Months; Listed Stock Valuation Losses Amid Market Decline

Sub-fund returns as low as -19.86%
Government and managers' subordinated investments cushion losses

The Public Participation National Growth Fund (Public Participation Growth Fund) posted a cumulative return of about 0.5% in the three months since its launch.

Yonhap News Agency

The Financial Services Commission said on October 26 that it reached this figure based on asset management reports disclosed by public fund managers, including Mirae Asset, Samsung and KB Asset Management.

According to the reports, from the first fund launch on June 12 through September 11, a total of about 46.3% of the funds had been invested across 10 sub-funds. Excluding cash equivalents, about 80% of the investment amount went to advanced strategic industries.

By investment share, advanced strategic industries accounted for 35.9%, sectors outside advanced strategic industries for 7.9%, bonds for 2.5%, and cash equivalents for 49.7%. By asset type, the portfolio comprised 28.4% listed stocks, 10.1% listed mezzanine securities, 0.7% unlisted stocks and 4.6% unlisted mezzanine securities.

Returns varied by sub-fund, ranging from -19.86% to 3.15%. However, because the government’s fiscal contribution and subordinated investments by sub-fund managers are structured to absorb the first approximately 20% of losses, the fund as a whole posted a positive return.

A Financial Services Commission official said, "Some sub-funds incurred valuation losses on listed stocks as stock market volatility increased in June and July." The official added, "The Public Participation Growth Fund is a closed-end fund with a five-year term, so it is more appropriate to assess its management performance from a long-term perspective than to focus on its return at this point."

The official explained that the fund’s investments are diversified across assets, including unlisted stocks and mezzanine securities, which are difficult to value immediately, as well as listed stocks. As a result, the timing of when investment performance is reflected varies by asset type.

Public fund managers said they would focus on stable management through diversification and risk management.

The managers said, "The assets in the overall portfolio are well diversified, and each private equity fund in which the sub-funds invest is leveraging its own competitive strengths to diversify across unlisted stocks and mezzanine securities, as well as listed stocks." They added, "We will thoroughly monitor key aspects of fund management, including portfolio assets and their proportions, in accordance with our sub-fund monitoring and risk management procedures."

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