Korea Investment Trust Management noted on the 22nd that it will launch the Korea Investment Hang Seng Tech Step-Up Partitioning Target Conversion Fund, which seeks stable revenue until the target revenue rate is achieved by making partitioned purchases of domestic listed Chinese Hang Seng Tech exchange-traded funds (ETFs). Investors can subscribe to this fund at SC First Bank until the 27th.
The Korea Investment Hang Seng Tech Target Conversion Fund is an investment product that is expected to benefit from the expansion of the artificial intelligence (AI) ecosystem due to the emergence of the Chinese DeepSeek and the Chinese government's economic stimulus measures. The main investment tool for this fund is the domestic Hang Seng Tech ETF, which includes 30 high-growth innovative technology stocks from the Hong Kong Stock Exchange.
The fund is characterized by employing the 'step-up partitioning strategy' to seek a target revenue rate (10%) with relatively low volatility. According to the partitioning strategy, about 30% of the total net worth will be composed of the Hang Seng Tech ETF during the initial setup, while the remaining approximately 70% will include domestic short-term bond ETFs. Subsequently, based on buying strategy signals, the weight of the Hang Seng Tech ETF will be gradually increased to ultimately reach 100%.
To achieve this, a strategy that combines price partitioning and time partitioning is implemented. The price partitioning strategy repeatedly trades about 4-5% of the total net worth whenever the benchmark index rises or falls by about 2%. Purchases are limited to three times within the same index price range. The time partitioning strategy involves a minimum purchase of 5% at least once every 10 business days, with purchases limited to three times within five business days.
Korea Investment Trust Management confirmed through its simulation that this strategy exhibits lower volatility compared to the market index (Hang Seng Tech) and demonstrated more stable performance even during loss periods. Specifically, when examining the maximum drawdown (MDD) indicator, which reflects the potential maximum loss in the investment process, the Hang Seng Tech index saw an average drop of -18% during periods from Jan. 15, 2015, over about seven years when assuming entry once a week, whereas this strategy's maximum loss was limited to -13%.
Due to the nature of a 'target conversion' fund, the portfolio will be readjusted to a bond-type fund upon reaching the target revenue rate (10%). The entire asset will be invested in relatively stable domestic bonds and liquid assets to ensure stable management until the liquidation point.
The duration of the fund management also varies based on the timing of achieving the target revenue rate. Depending on when it is achieved, it can be divided into ▲1 year from the initial setup date (if achieved within 6 months) ▲6 months after fund conversion (if achieved after 6 months) ▲5 years (if the target revenue rate is not reached). However, investors can redeem their investment at any time without incurring fees if they wish.
The responsible manager, Cha Hye-min, head of the Global Quantitative Management Department at Korea Investment Trust Management, explained, 'The Korea Investment Hang Seng Tech Step-Up Partitioning Target Conversion Fund is a product developed to reduce the investment burden of Hang Seng Tech for investors and allow them to reach their target revenue rate through a trading strategy proven by simulation.'
However, the Korea Investment Hang Seng Tech Step-Up Partitioning Target Conversion Fund is a performance-based product, and past revenue does not guarantee future performance; principal losses may occur depending on management results.