Kim Nam-gi, the Vice President of Mirae Asset Global Investments, is explaining the TDF ETF at the TIGER TDF2045 ETF listing press conference./Courtesy of Jo Eun-seo, reporter
Kim Nam-gi, the Vice President of Mirae Asset Global Investments, is explaining the TDF ETF at the TIGER TDF2045 ETF listing press conference./Courtesy of Jo Eun-seo, reporter

Investors in their 30s and 40s nearing retirement in 20 years can fully prepare for their retirement with just one Target Date Fund (TDF) 2045 Exchange-Traded Fund (ETF).

Kim Nam-ki, Deputy Minister of Mirae Asset Global Investments, noted at the "TIGER TDF2045 ETF listing press conference" held at the FKI Conference Center in Yeouido, Seoul, that it would become a "strong one-ticket solution" for pension investments.

A TDF is a fund that manages assets according to the retirement date set by the participant. In the early stages, when retirement is far off, the fund has a higher proportion of risky assets, and as the retirement date approaches, it uses a glide path strategy that increases the proportion of safe assets.

The TIGER TDF2045 ETF invests in the S&P 500 (79%) and domestic short-term bonds (21%). By the year 2045, when those in their 30s and 40s retire, the proportion of risky assets will gradually decrease (79% → 39%), while the proportion of safe assets will increase (21% → 61%).

Dividing the life cycle into three sections, the proportion of risky assets will be reduced by 1% each year until 2040, and from 2041 to 2045, it will decrease by 5% each year. From 2046, the proportion of risky assets will be fixed at 39%, and the remainder will be invested in Government Bonds to ensure stability.

Mirae Asset Global Investments identified its differentiating factor as the ability to easily forecast future expected returns based on a passive strategy. Yoon Byung-ho, head of the Strategic ETF Management Department, explained, "Anyone can calculate the TDF2045 ETF's returns just by knowing the returns of the S&P 500 and the exchange rate index," adding, "This transparency can be confirmed in a specific and intuitive manner."

Additionally, fees favorable for long-term investments have been set. The management fee for this part was eliminated by directly managing the S&P 500 index. The total fee rate is 0.19%, which is low compared to the average total fee rate of 0.75% for TDF ETFs.

It may also become a method to maximize the proportion of risky assets within a retirement pension account. The "TDF2045 ETF" qualifies as a "qualified TDF" with a risky asset proportion of less than 80%, allowing for 100% investment from retirement pension accounts. If 70% is invested in the "S&P 500 ETF" and the remaining 30% is invested in the "TIGER TDF2045 ETF," it would allow for up to 93% investment in the S&P 500 within the pension account.

Kim Nam-ki, Deputy Minister of Mirae Asset Global Investments, said, "It is favorable for investors who want to increase their exposure to risky assets during corrections in the U.S. stock market," adding, "Within the retirement pension account, without additional investment funds, existing safe assets can be exchanged for the TDF2045 ETF to increase the proportion of risky assets."