Why young Koreans are less interested in $420 mil. state-backed equity fund

A notice at the main branch of Shinhan Bank headquarters in Seoul announces that both online and offline subscription quotas for the state-backed National Growth Fund had sold out, May 22, the opening day of retail subscriptions. Newsis

Young Koreans showed relatively little interest in the country's state-backed growth fund launched earlier this year, despite strong overall demand for the 600 billion-won ($420 million) fund, data showed Monday.

According to data obtained by Rep. Kim Sang-hoon of the main opposition People Power Party from the Financial Services Commission (FSC), the first round of the National Growth Fund program attracted 30,038 subscribers and sold out within a week of its launch on May 22.

Investors in their 50s were the largest group by both the number of subscribers and the amount invested.

A total of 10,173 people in their 50s invested 231.6 billion won, accounting for 33.9 percent of all subscribers and 38.7 percent of total investment.

By comparison, 5,852 investors in their 20s and 30s invested a combined 80.2 billion won. The two age groups accounted for 19.5 percent of all subscribers, and 13.4 percent of total investment.

Investors in their 40s numbered 9,357 and invested 170.6 billion won. Those aged 60 and above numbered 4,588 but had the highest average investment, at 23.36 million won through banks and 27.8 million won through securities firms.

The fund is part of the 150 trillion won Korea National Growth Fund program, launched late last year as one of President Lee Jae Myung's key economic initiatives aimed at fostering advanced industries, including artificial intelligence, semiconductors, biotechnology, robotics and rechargeable batteries.

The relatively low levels of investment by younger Koreans appears to reflect their more limited financial resources and the fund's five-year maturity, with restrictions on early redemption posing a hurdle for those who may need access to their money sooner.

The timing may also have played a role. Around the fund's launch in late May, the benchmark KOSPI was on a strong rally, surpassing 9,000 points for the first time on June 18 and drawing many younger investors' attention to the stock market.

The government plans to step up efforts to attract younger investors to the second round of the fund later this year.

The FSC plans to launch another 600 billion-won fund in September, raising the share reserved for "low-income" investors to 50 percent from 20 percent in the first round.

More than 60 percent of young investors who joined the first fund fell into the low-income category, according to the data.

"By increasing the allocation for lower-income investors, we expect more young people to join the fund," said FSC secretary-general Shin Jin-chang.