The first Public Participation Growth Fund posted a 0.5 percent cumulative return over the past three months, prompting financial authorities to say it is difficult to judge performance based only on short-term returns. They said a high share of long-term investment assets means it will take time for visible results to emerge.

The Financial Services Commission said on Oct. 29 that an asset management report for the first fund, disclosed on Oct. 26, put the three-month cumulative return at 0.5 percent as of Sept. 11.

Jin-chang Shin (신진창), vice chairman of the Financial Services Commission, said at a meeting to discuss operating strategy and management measures for the second fund that the Public Participation Growth Fund is a closed-end fund with a five-year maturity and is still in the early stage, having just begun operations.

He added that given the nature of advanced strategic industries requiring mid- to long-term investment and the fact that investments are diversified across various sectors and companies, it takes a considerable period to achieve visible results.

The fund’s investment targets include not only listed shares but also unlisted shares and mezzanine instruments. The commission said the current return is difficult to view as fully reflecting the fund’s value because valuation timings differ by asset.

Shin said investors should take a long-term view of operating performance so companies and the fund can grow together, rather than reacting sharply to returns at the current point in time.

The commission is also stepping up work on operating the second Public Participation Growth Fund. Attendees at the meeting included the Public Growth Fund Promotion Task Force, Korea Development Bank, Korea Growth Investment Corporation and 10 sub-fund managers that will run the second fund’s capital.

The managers will split and manage a total of 630 billion won, including public investment money and fiscal funds. They plan to invest at least 30 percent of the committed amount as new capital in unlisted companies or KOSDAQ technology-special listing companies, and to invest at least 60 percent of the total in advanced strategic industries, including that portion.

A performance incentive structure will also apply under which some excess returns are shared with managers depending on operating results. The managers plan to supply new capital to growth companies during the initial investment period and build portfolios that are not concentrated in specific stocks.

The first fund, launched in May, sold out early. The second fund, additionally launched on Sept. 30, ended sales on Oct. 15, with 32,756 subscribers and sales of 519.8 billion won, reaching 86.6 percent of its target amount. The first fund had 30,038 subscribers.

Shin said the commission will manage the fund systematically so it is operated with the public’s interests as the top priority.