The government will introduce a second tranche of the people’s participation-type National Growth Fund (People’s Participation Growth Fund) in the third quarter of this year (July–September), with a total size of KRW 600 billion. As the first tranche, which was originally planned to be sold over three weeks, sold out in five days, the government is moving to supply additional volume.

At a meeting with People’s Participation Growth Fund managers held at the Korea Financial Investment Association in Yeongdeungpo-gu, Seoul, on the 12th, Financial Services Commission Vice Chairman Lee Ok-won said, “As the People’s Participation Growth Fund launched last month sold out early, we plan to launch a second fund worth KRW 600 billion in the third quarter,” adding, “It was possible to sense the strong demand among the public for investment destinations that are both stable and profitable.”

As with the first tranche, KRW 120 billion in fiscal funds will be injected into the second tranche, with the government assuming up to 20% of losses first. Income tax deductions on 10–40% of the investment principal and a 9.9% separate taxation rate on dividend income will also be applied in the same manner. Going forward, the Financial Services Commission plans to finalize details, including the allocation for ordinary retail investors and the share of online sales, after collecting opinions from banks and securities firms.

The government had initially planned to launch KRW 600 billion of People’s Participation Growth Funds each year, creating a total of KRW 3 trillion over the next five years. As the structure offering income tax deductions, separate taxation on dividend income, and partial loss compensation emerged as an attractive feature, the first tranche, launched on 22 May last month, sold out its KRW 600 billion allocation in five days.

To enhance the returns of the People’s Participation Growth Fund, the Financial Services Commission has also prepared incentives. For asset management companies whose cumulative 5-year return exceeds 30%, a portion of the excess return will be paid as performance fees. Additional performance fees will also be provided to managers that allocate at least 40% of new funds to unlisted companies or KOSDAQ-listed firms using the technology growth listing track, or achieve at least 40% of their investments in non-metropolitan regions.

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