Samsung Asset Management has teamed up with US asset manager Capital Group to introduce six target date funds (TDFs) in Korea.
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TDFs, a first for Korea, has been designed to automatically reduce risk as the investor reaches the target retirement date. To do so, fund managers will increase bonds and reduce the proportion of stocks as the retirement date nears.
Samsung Asset Management CEO Sung-hoon Koo said: "If we look at the current retirement pension market in Korea, products with guaranteed principal and interest represent 89.2% [of market share]. In the case of personal pensions, the proportion of insurance-type products is 76%.
"Moreover, even though the Korean market is only 2% of the global market, 86% of retirement pensions and 81% of personal-pension assets are invested in the domestic market.
"In the current environment of low interest rates and low growth, these investments will not be able to support the retirement needs of Koreans through stable income with appropriate diversification."
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By GlobalDataThe new TDFs will have retirement target years of 2020, 2025, 2030, 2035, 2040 and 2045.
It will include 11 varied underlying funds managed by Capital Group across asset classes with diverse risk-return characteristics.
