Korean Hedge Funds
According to industry sources, NH Investment & Securities’ hedge fund NH Absolute Return 1, which was formed two months ago, raised 285 billion won until Oct. 17. The company is planning to raise a total of 300 billion won with this fund within this year, and the goal is likely to be achieved soon.
Korea Asset Investment Securities’ hedge fund called Korea Asset Classic Public Offering Fund 1 raised 16.8 billion won in its first month on the market. Investing mainly in government and public bonds, top-rated corporate bonds and publicly offered shares, this fund is to achieve a yearly return of at least 7 percent and the raised amount is expected to increase to more than 20 billion sooner or later. Taurus Investment & Securities released a hedge fund dubbed Taurus Government Bond Master Alpha Investment Trust 1 on Sept. 1 and has raised 11.3 billion won since then. The company is planning to increase the amount to 100 billion won in the near future and to one trillion won in the first half of next year. Its target rate of return is 2.75 percent a year.
The three funds mentioned above are the first ones of their kind since the South Korean financial authorities allowed securities companies to engage in professional private collective investment in August this year. Thanks to their good start, they are working on more of the same type of hedge funds. For example, Korea Asset Investment Securities is going to release a high-yield real estate fund and a mezzanine fund within this year.
Still, the others in the industry are exercising caution. Earlier, more than 10 securities firms were expected to release hedge funds. According to the Financial Supervisory Service, however, no local securities company has applied for the professional private collective investment license. “The rates of return of the hedge funds released by the securities firms have yet to be confirmed, and it is not easy to find highly reliable managers with sufficient track records,” said an industry source.