An employee heads into the Public Growth Fund office at the Korea Development Bank in Seoul, Wednessday.

Retail investors will soon be able to invest in a government-backed investment fund aimed at fostering next-generation industries such as artificial intelligence (AI), semiconductors and biotechnology, officials said Wednesday.

Of the broader 150 trillion won ($ 103.4 billion) state-backed Public Growth Fund — one of President Lee Jae Myung’s key economic initiatives targeting 12 strategic industries — 600 billion won annually over the next five years will be set aside for direct public participation. The subscription period will run from May 22 to June 11.

According to the Financial Services Commission (FSC), retail investor money will be pooled into a fund of funds, or master fund, which will then allocate capital across subfunds operated by 10 selected asset management firms.

To enhance returns, investors will receive tax incentives, including income deductions of up to 40 percent and separate taxation on dividends.

Each sub-fund must invest at least 60 percent of its assets in companies tied to sectors such as semiconductors, secondary batteries, future mobility and AI. Within that portion, at least 30 percent must be deployed as fresh capital into unlisted companies or technology-focused Kosdaq-listed firms.

The remaining 40 percent of assets may be invested more flexibly at managers’ discretion, allowing broader diversification and potentially stronger returns.

Beginning May 22, fund subscriptions will be offered on a first-come, first-served basis through banks and brokerages. However, 20 percent of total offerings — equivalent to 120 billion won — will be reserved for lower-income households during an initial two-week priority window.

To qualify for tax benefits, investors must participate through dedicated accounts, which carry a five-year cumulative investment cap of 200 million won. The fund itself is structured as a five-year lockup product, meaning early redemption will be heavily restricted.

While regulators cautioned that expected returns remain difficult to predict, officials emphasized that the fund is designed to improve meaningfully on the shortcomings of the Moon Jae-in administration’s New Deal Fund, which delivered weak returns due to rigid investment restrictions and limited exit opportunities.

Source: Korea Times News