The People's Growth Fund, a public-participation fund heavily promoted by the government with the promise of "covering up to 20 percent of losses," has been engulfed in concerns over principal loss in less than two months since its operation began.
Recently, an online community shared a photo of an investment status showing an evaluation loss worth 670,000 won on an investment of 15 million won, spreading discontent among investors.
The reference price of the People's Growth Fund has dropped to 961.9 won, falling below the initial setup price of 1,000 won.
This fund was designed with a "junior investment" structure where the government and asset managers preferentially cover up to 20 percent in the event of a loss.
However, analysis suggests that because the effect of this government loss coverage is already factored into the calculation of the reference price, the decline in the reference price implies that the loss rate may have already exceeded the government's 20 percent coverage limit.
The asset management industry believes that the recent sharp plunge in the domestic stock market and the sluggish performance of the KOSDAQ market have dealt a direct blow to the fund's returns.
Furthermore, critics point out that the fund has an inherently vulnerable structure to volatility due to its high mandatory investment ratio in KOSDAQ and unlisted companies.
On the other hand, some in the industry argue that since the People's Growth Fund is a closed-end product where redemption is impossible for five years, it is premature to hastily conclude principal loss based solely on early operational performance.
Reported by Lee Hyeon-yeong | Video by Kim Min-ji | Design by Lee Jeong-ju | Produced by SBS Digital News
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