“It can be said that what retirees desire is to operate their retirement pension steadily without the possibility of the principal being depleted. KCGI Asset Management’s Didim Fund will be operated with the goal of protecting the principal even if 4% is withdrawn every year.”
Kang Yeon-soo, Head of Global Management Division at KCGI Asset Management. Photo = Reporter Yoo Hyeon-seok
Kang Yeon-soo, head of KCGI Asset Management’s Global Management Division, introduced the ‘KCGI Didim Freedom Lifetime Income TIF Fund’ at a meeting held at the Financial Investment Association in Yeouido on the 21st.
The KCGI Didim Freedom Lifetime Income TIF Fund was created to be suitable for implementing William Bengen’s ‘4% rule’, which states that even if 4% of the assessed amount is withdrawn every year, withdrawals can be made for more than 30 years. From the beginning of development, it was designed to be suitable for use during retirement age. KCGI Didim Freedom Lifetime Income TIF Fund is a renewal of the fund launched in October 2020. Looking at the rate of return of the existing fund, it was 22.3% since establishment and the annualized compound rate of return was 5.0%. Director Kang said, “It has been almost four years since the fund was established, and it has achieved an average annual return of 5% since October 1, 2020.”
KCGI Didim Freedom Lifetime Income TIF Fund invests more than 60% in safe assets such as domestic bonds and overseas bonds, and the remainder is diversified and invested in a total of eight asset classes, including developed country stocks, developed country growth stocks, US high dividends, emerging market stocks, domestic stocks, and REITs. He said, “In the case of a general balanced fund, it is a somewhat simplified form of domestic and foreign stocks and domestic and foreign bonds.” He added, “We include domestic and foreign stocks, overseas growth stocks and foreign dividend stocks, domestic emerging market stocks, and REITs, which are alternative investment assets. “We are even investing,” he emphasized.
KCGI Asset Management plans to rebalance the assets of the KCGI Didim Freedom Lifetime Income TIF Fund whenever risk factors arise. He explained, “Tactically, we are allocating assets every quarter and whenever we determine that specific risk factors have emerged,” adding, “We pursue stable excess returns by regularly rebalancing the proportion of stocks and bonds every year.” did it
He said, “We considered the fundamentals of countries and asset classes and worked on a combination of asset classes that could maximize return on risk through multiple backtests,” and “adjusted portfolios to maximize excess return on risk while minimizing volatility.” “We focused on killing two birds with one stone.”
The target rate of return for the KCGI Didim Freedom Lifetime Income TIF Fund is 5-7% per year. Target volatility and target maximum loss are 6% and 10%, respectively. He emphasized, “Controlling the maximum loss rate to within 10% is seen as the key to achieving the 4% rule,” and added, “When the maximum loss approaches 7%, we operate a risk management system that prioritizes principal defense.” He added, “Even if we withdraw 4% of the investment each year, we will aim to generate an average annual return of 5.4% on the remaining assets so that we can use them to implement the 4% rule.”
Reporter Yoo Hyeon-seok [email protected]
