Korea Investment & Securities Co. said on the 23rd that as of the end of last year, cumulative subscriptions for profit-and-loss tranching public funds reached 1.0839 trillion won, surpassing 1 trillion won. The total assets under management, including the company's subordinate commitments, came to 1.3831 trillion won.
A profit-and-loss tranching fund is designed so that investors can participate in a single product with different risk and return structures by separating risk and return among investors. In particular, Korea Investment & Securities Co.'s profit-and-loss tranching public funds adopt a structure in which customers participate as senior and financial firms such as Korea Investment & Securities Co. participate as junior, strengthening investor protection features.
Korea Investment & Securities Co. said that when losses occur, the junior tranche absorbs losses first up to a certain level to cushion the risk for senior investors, and even in profit-generating ranges, the allocation is designed to apply a relatively stable structure for the senior tranche.
Korea Investment & Securities Co. said this senior-junior tranche structure can function as a buffer that structurally lowers the volatility burden for retail investors while reducing excessive loss exposure during market swings. It also noted that the method of financial firms joining as junior to share risk can build investor trust and help spread a sound long-term investment culture.
Product supply continues this year. On Jan. 22, Korea Investment & Securities Co. completed a 110 billion won subscription for the "Korea Investment Global AI Innovation Industry Fund," and set the fund at a total of 125.8 billion won including the company's junior investment commitment. In addition, it is accepting subscriptions for the "Korea Value K Power 2 Fund" through Jan. 29.
Kim Seong-hwan, president of Korea Investment & Securities Co., said, "Profit-and-loss tranching funds are designed to enhance the quality of the investment experience by structurally easing volatility that retail investors find hard to bear, as the company shares investment risk," adding, "We will continue to expand consumer protection products tailored to investors' profiles and life cycles, and strengthen a sustainable asset management framework."