Samsung Asset Management launches new retirement funds

Korea’s Samsung Asset Management launched a new type of retirement funds called target-date funds, jointly with U.S. asset manager Capital Group on Thursday, seeing opportunities in Korea’s aging society.

Target-date funds, which are being introduced in the Korean market for the first time, provide a mix of stocks and bonds based on the investor’s age and planned retirement date. Fund managers increase the proportion of bonds and reduce that of stocks as the investor ages.

“We saw the financial investment needs of Korean society where old age poverty rate is three times higher than the OECD average. Koreans need proper retirement programs and investment returns,” Samsung Asset Management CEO Koo Sung-hoon said in a press conference in Seoul.

“The target-date funds we launched today are customized for the Korean market where people tend to retire earlier than Americans. So, in our portfolio, the proportion of stocks can be a bit smaller (than in the U.S.),” he said.

Samsung’s target-date funds consist of six funds depending on the planned retirement year of 2020, 2025, 2030, 2035, 2040 and 2045. The funds allocate different proportions of 11 global funds, managed by Capital Group, in a mix of equities and bonds in the U.S., Europe, Asia and other emerging markets.

Capital Group chairman Shaw Wagener, who also attended the press conference, said the U.S. firm launched target-date funds in 2007. After the U.S. government designated target-date funds as a default investment option for a retirement plan in 2006, total assets in target-date funds grew from $183 billion in 2007 to $763 billion at the end of 2015, Wagener said.

Although Samsung’s target-date funds will be similar to the U.S. ones, a variety of factors will be adjusted to the Korean product in terms of a faster increase in life expectancy and higher savings rates in Korea, Wagener added.

By Kim Yoon-mi (yoonmi@heraldcorp.com)