The public participation "Public Growth Fund (Public Participation Growth Fund)" will be sold on a first-come, first-served basis starting on the 22nd in the amount of 600 billion won. The Public Participation Growth Fund combines 600 billion won in public money, 120 billion won in fiscal funds, and asset manager investments to create a parent fund that invests in 10 sub-funds. If the fund incurs losses, government finances will cover up to 20% first, and it also offers income tax deductions of up to 40% (capped at 18 million won).
The Financial Services Commission released a frequently asked questions (FAQ) list that investors should know in advance and on May 19 provided guidance on what to keep in mind when subscribing to the Public Participation Growth Fund.
The Public Participation Growth Fund will be sold on a first-come, first-served basis for three weeks from the 22nd to June 11. Subscriptions will be available at 10 banks and 15 securities firms. Sales may close early if the allotment is exhausted. In the first week of sales, the online allocation will be managed at about 50% of the total.
For the first two weeks, 120 billion won, or 20% of total sales, will be allocated exclusively to low- and middle-income earners. The criteria are earned income of 50 million won or less (38 million won or less if there is composite income). Any remaining allotment not sold within two weeks will be offered to the general public in the third week.
The subscription limit per person is 1 billion won per year, 2 billion won over five years. The maximum one-time subscription amount is 1 billion won, and the minimum varies by distributor—100,000 won or 1 million won. To receive tax benefits, subscribers must submit an income verification certificate for the Individual Savings Account (ISA). For those ages 15 to under 19, an income amount certificate (based on the previous year) is required.
The Public Participation Growth Fund is a high-risk investment product (grade 1) with the possibility of principal loss, and, the Financial Services Commission (FSC) said, subscriptions are allowed only if an investor suitability assessment diagnoses the investor as having an appropriate risk profile. Upon subscription, the investment must be paid in a lump sum, and redemptions are not allowed for five years.
Caution is also needed regarding the loss-absorption structure. Fiscal funds will first cover losses equal to 20% of the public investment pool, not 20% of each individual's invested amount.
The Financial Services Commission (FSC) said, "Based on the total size of each sub-fund, the fiscal first-loss absorption ratio may be lower than 20%."