Policy-oriented public offering funds are about to be launched: the National Growth Fund, with a scale of 600 billion Korean won to cultivate cutting-edge industries

The Financial Committee has essentially completed the selection process for the sub-fund operating companies of the National Participation National Growth Fund. Within this month, policy-oriented public funds accessible to ordinary investors will be officially launched. The fund structure incorporates some government financial support to reduce loss risks and includes tax incentives, making its potential to become a new investment channel connecting national funds with strategic industries a focus of attention.

According to the financial authorities on the 3rd, the Financial Committee will announce the selection results for the sub-fund operating companies of the National Participation National Growth Fund next week. The total fund size is 600 trillion won, with 120 trillion won to be contributed by the government. The responsible fund-raising operating companies have been identified as Future Asset Securities, Samsung Asset Management, and KB Asset Management, and the 10 sub-fund operating companies responsible for actual investment execution will also be announced simultaneously. The fund raises national funds in the form of public funds to invest in stocks and bonds, but to reflect policy objectives, its design is not purely profit-driven but also aims to cultivate national strategic industries.

The investment focus is clearly on cutting-edge industries. Each sub-fund must invest at least 60% of the raised capital in enterprises related to 12 strategic industries, including semiconductors, secondary batteries, hydrogen energy, future automobiles, biotechnology, artificial intelligence, and robotics. Notably, over 30% of investments must be made through new capital supply methods, with investment standards set as: investing at least 10% in unlisted companies, and at least 10% in companies listed on the Kosdaq with special technological listings. This move is interpreted as an effort to guide funds toward innovative companies in their growth stage, rather than large listed companies that have relatively easier access to market financing. Investment in KOSPI-listed companies is limited to within 10%, with the remaining 40% managed independently by the operating companies.

The design of the return structure also aims to lower the entry barrier for ordinary investors. The performance of each sub-fund is not calculated separately but is pooled and then distributed to investors after unified settlement. The benchmark return rate is set at 30% over five years, approximately 6% annually; if performance exceeds this standard, the operating company can earn performance fees. Notably, the government participates via a subordinated capital contribution, with a mechanism that caps its maximum loss at 20%. The subordinated capital means that in case of losses, the government’s share will bear the first losses, providing risk mitigation for ordinary investors. Additionally, after a three-year investment period, investors can enjoy income tax deductions: 40% deduction on amounts up to 30 million won, 20% on amounts between 30 million and 50 million won, and 10% on amounts between 50 million and 70 million won, with a maximum deduction limit of 18 million won.

The government does not view this fund as a standalone product but as part of a broader industrial financial policy. The authorities explain that the purpose of the National Participation Fund is to share the results of cultivating strategic industries with the public. Meanwhile, Korea Development Bank and ShinRong Asset Management are conducting a public recruitment of entrusted operating companies for the first investment project of the National Growth Fund targeting institutional investors. According to industry sources, in the selection of 11 companies across seven areas including the overall ecosystem, targeted support, and projects, 81 companies applied, with a competition ratio of 7.4 to 1. Particularly, in the “Ecosystem Overall Challenge” allowing operators without prior policy fund experience, 2 slots attracted 35 companies competing. The Financial Committee plans to finalize the entrusted operating companies within this month, complete the second project selection in July, and establish the sub-funds within the year. The government is aiming to create a total of 150 trillion won in the National Growth Fund over five years through indirect investments, along with 15 trillion won in direct investments, 50 trillion won in infrastructure investments and financing, and 50 trillion won in low-interest loans. This trend may indicate that future policy experiments to guide private capital into cutting-edge industries will be fully launched.