The National Growth Fund, which invests in advanced strategic industries, will be sold to the general public for three weeks starting on the 22nd of this month. The government will cover up to 20% of principal losses and provide income tax deductions of up to 40%.
The Financial Services Commission (FSC) announced Tuesday that the National Participation Growth Fund will be sold on a first-come, first-served basis through the online and offline channels of 25 banks and brokerages from the 22nd of this month to the 11th of next month. The move opens the door for individuals to invest in the government-operated 150 trillion won ($109 billion) National Growth Fund.
The National Participation Growth Fund is structured as a parent fund composed of 600 billion won in public capital and 120 billion won in fiscal funds, which invests in 10 sub-funds. More than 60% of the sub-funds will be channeled into advanced strategic sectors such as artificial intelligence (AI), semiconductors and bio. Of that portion, 30% will be invested as new capital (rights offerings, mezzanine, etc.) in unlisted companies and KOSDAQ technology special-listed firms. The remaining 40% can be managed freely by each asset manager.
Individuals can invest up to 100 million won per year in the National Participation Growth Fund. The maximum cumulative limit is 200 million won over five years. The minimum investment is determined autonomously by each distributor within a range of 1 million won or less.
The fund also offers exceptional tax benefits. Those who open a dedicated account and are 19 or older, or wage earners aged 15 or older, are eligible. Investors who hold for three years or more receive an income tax deduction of up to 40%. Dividend income benefits from a 9% separate taxation rate. Subscription through a general account is also available without tax benefits, with an annual investment limit of 30 million won per person.
Of the 600 billion won in sales, 120 billion won will be allocated on a priority basis to lower-income earners with wage income of 50 million won or less (or comprehensive income of 38 million won or less). "The purpose of the National Participation Growth Fund is to share the fruits of economic growth with the public," an FSC official said. "We separately allocated a portion for lower-income earners to prevent subscription opportunities from being concentrated among general investors."
In the event of investment losses, the government will absorb up to 20% of the damage. Principal losses arising during fund management will be deducted from government fiscal resources first. The measure reflects the fact that ordinary citizens are making long-term investments in venture capital, allowing individuals to invest with reduced concerns about losses. The total fund fee is approximately 1.2% per year (about 1.0% online).
Investors should note that the National Participation Growth Fund is a closed-end fund, meaning early redemption is not permitted for five years. After the fund is established and listed on the exchange, transfers are possible, but trading may not be smooth due to low liquidity. If transferred within three years of investment, an amount equivalent to the tax benefit received will be clawed back.
"If the cumulative five-year return exceeds 30%, asset managers will be allowed to take the excess returns beyond management fees," the FSC official said. "We plan to launch the National Participation Growth Fund on an annual basis of 600 billion won each year through 2030."
