Shinyoung Asset Management said on the 20th that it has launched the Shinyoung K Pure Value Securities Feeder Investment Trust (Equity), a fund that invests in undervalued companies overlooked by the market. The strategy is designed to reduce concentration in a handful of large-cap semiconductor stocks and to find new sources of return among companies whose share prices lag their earnings and asset value.
The fund screens for stocks with rising profit and revenue whose corporate value is not fully reflected in their share price. It combines quantitative measures such as return on equity (ROE) and price-to-book ratio (PBR) with the research capabilities Shinyoung has built over 30 years, distinguishing companies that are undervalued because of temporary setbacks from those that have structurally lost their competitiveness.
The fund focuses in particular on avoiding "value traps" — stocks that look cheap but are unlikely to recover because of deteriorating earnings or competitiveness. It examines business competitiveness, financial structure and cash-generating capacity, and also reviews major shareholders' commitment to shareholder returns and policies to boost corporate value. The aim is not simply to buy cheap stocks but to find companies with a catalyst that can close the valuation gap.
The selected stocks are held in equal weightings rather than weighted by market capitalization. Each holding is capped at 10% of the portfolio, and sectors and themes are evenly divided to reduce dependence on any single company or industry. The approach seeks a return stream separate from large-cap market leaders and aims to deliver diversification benefits when volatility rises among those leaders.
The fund targets an absolute return of 10% to 15% a year rather than tracking a particular index. It does not guarantee that the target return will be met. Performance may lag in rallies led by market leaders, but the fund plans to focus on how undervalued individual companies are and on their intrinsic value, without being bound by index composition.
"This is a product that is not concentrated in a particular industry or market capitalization, and that uncovers new sources of return the market has not priced in," an official at Shinyoung Asset Management said. "We aim to deliver sustainable performance through long-term assets such as retirement pensions and pension savings accounts."