Sales of the second “public participation” National Growth Fund, which allows retail investors to join the government’s National Growth Fund, will begin on Sept. 30. It will be created at a total size of 600 billion won and invest in future advanced industries such as artificial intelligence (AI), semiconductors, energy and biotech.

According to the financial investment industry on Sept. 30, Mirae Asset Global Investments, KB Asset Management and Samsung Asset Management have begun raising money for the second public participation National Growth Fund. Brokerages including Hana Securities, Hanwha Investment & Securities and Korea Investment & Securities have also started opening dedicated savings accounts and selling the fund.

The total fundraising size of the second fund is 600 billion won. The basic sales period runs from Sept. 30 to Oct. 15, and sales could end early if allotted volumes are sold out.

The public participation National Growth Fund is a publicly offered fund designed to allow individual investors to participate in the government’s “National Growth Fund,” a public-private joint financial support programme. The National Growth Fund aims to supply a total of 150 trillion won over five years to advanced strategic industries such as AI, semiconductors, secondary batteries, biotech and energy.

It is structured to indirectly invest in unlisted growth companies and private equity funds related to advanced industries that are difficult for retail investors to access directly. Mirae Asset Global Investments plans to run the second public participation fund as a mixed-asset fund that reinvests in private equity, and to raise about 200 billion won. KB Asset Management has also begun fundraising of 200 billion won.

A key feature is a “loss buffer” structure under which the government and private equity fund managers bear losses before retail investors. The government’s fiscal funds and the managers’ money are invested as junior tranches, while retail investors participate as senior tranches.

Based on each underlying private equity fund, junior tranche investors bear losses first up to about 18.8 to 23.3 percent. If losses exceed the junior tranche investment, retail investors can also suffer principal losses, so it does not guarantee principal.

Tax benefits are also provided. If investors subscribe through a dedicated savings account and meet certain holding requirements, they can receive an income deduction of up to 40 percent depending on the investment amount.

An income deduction rate of 40 percent applies to investments of 30 million won or less, 20 percent to more than 30 million won and up to 50 million won, and 10 percent to more than 50 million won and up to 70 million won. The annual income deduction limit is up to 18 million won.

If held to maturity for at least five years, dividend income also qualifies for a separate low tax rate of 9.9 percent. If redeemed within three years of investment, previously received tax benefits may be clawed back.

The subscription limit for the dedicated savings account is 100 million won per person per year and 200 million won in total over five years. Domestic residents aged 19 or older, or earned-income workers aged 15 or older, can subscribe, and subscriptions may be restricted for those who were subject to comprehensive taxation on financial income for certain periods in the past.

Each seller has also prepared services and events to improve accessibility for individual investors.

Hana Securities enabled customers to proceed from account opening to fund subscription on its mobile trading system (MTS) “Hana Securities V” without submitting separate eligibility verification documents.

Hanwha Investment & Securities will run an event through Oct. 15 for customers subscribing via a dedicated savings account, paying cash depending on the net subscription amount.

Korea Investment & Securities will also begin selling the second fund on Sept. 30. It will initially allocate some volumes on a priority basis to low-income retail investors, then sell the remaining volumes to all investors. Customers who actually invested in the first fund will face restrictions on subscribing again to the second fund.

Samsung Asset Management also launched a second product after the first fund sold out early. It is raising money by expanding subscription opportunities, including setting aside separate initial allocations for low-income investors.

The industry is watching whether tax benefits and the loss-buffer structure, following the popularity of the first product, will draw investment demand in the second fundraising as well.

A Mirae Asset Global Investments official said, “The National Growth Fund is a product that mainly invests in advanced strategic industry companies with high growth potential and adds a stability structure for long-term investment.” The official added, “It also has strengths as a tax-saving product, such as income deductions and separate taxation at a low rate.”