Manager Kim at the Next Desk Is Retiring with Me... So Why Will He Get So Much More?

TDFs: Return gaps exceed 10 percentage points even among funds with the same vintage
Differences in product characteristics, including asset classes and investment countries
"Long-term performance and risk management should both be considered&q

As stock markets have become volatile, returns on target-date funds (TDFs), a type of retirement pension product, have also declined. Notably, performance varies widely even among funds with the same target retirement year, or vintage, prompting recommendations that investors analyze each product’s characteristics and long-term returns before investing.

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According to FnGuide on Nov. 6, 697 (98.0%) of the 711 TDFs with assets of at least KRW 1 billion posted negative returns over the past month. TDFs generally increase their allocation to safe assets as the target retirement year, or vintage, approaches. As a result, with the exception of some lower-vintage products, most funds posted weak returns amid the stock market downturn. BNK Reliable Eligible TDF 2030 had the highest return, at 0.89%, while Samsung KODEX Korea Eligible TDF 2065 Active had the lowest, at -16.33%.

Performance varied widely even among TDFs with the same vintage. Among 2050-vintage funds, BNK Reliable Eligible TDF 2050, the top performer, gained 0.65% over the past month, while KB Korea Focus Eligible TDF 2050 fell 14.71% over the same period. Despite targeting retirement in the same year, the two products had a return gap of 15.36 percentage points.

An analysis by Korea Retirement Pension Data (Glide) found that return gaps among funds with the same vintage tend to widen for later vintages. Last month, the gap between the best- and worst-performing funds in each vintage was 2.26 percentage points for 2025, 4.67 percentage points for 2030, 6.76 percentage points for 2035, 9.35 percentage points for 2040, 6.98 percentage points for 2045, and 10.47 percentage points for 2050.

The widening differences in returns are believed to reflect both the growing range of themes among TDFs and the investment assets they hold, alongside increased investment in retirement pension products. The recent sharp decline in South Korea’s stock market also dragged down returns for TDFs concentrated in domestic equities. TDFs typically diversify not only across asset classes such as stocks and bonds but also across countries. In the first half of this year, however, South Korea’s stock market surged, and a series of products with higher allocations to domestic assets were launched.

Even TDFs with the same vintage can differ in returns because their portfolio composition and management strategies, including risk hedging, vary. Some TDFs build their portfolios primarily around actively managed funds, while others invest mainly in passive funds or ETFs. A single asset manager may also offer several TDF lineups with different strategies and investment assets.

Currency positioning was another factor behind the differences in TDF returns last month. According to Glide, during last month’s won appreciation, currency-hedged (H) TDFs outperformed unhedged (UH) products by an average of 0.75 percentage points. Kiwoom Kiwo Dream Eligible TDF 2060 returned -5.82% for its currency-hedged (H) class over the past month, compared with -6.15% for its unhedged (UH) class.

Youngju Nielsen, CEO of Korea Retirement Pension Data, said, “In the same month, when the market fell by more than 3%, some funds targeting the same retirement year made gains while others lost nearly 10%.” She added, “When choosing a TDF, investors should look beyond its ranking over a month or two and consider its consistency and risk management over the long term.”

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