Shinhan Asset Management is launching four pension funds designed to help retirees draw down living expenses after they stop working. The funds invest retirement assets while paying monthly distributions, and preserve remaining assets once the target withdrawal period ends. With the company posting the industry's largest increase in target date fund (TDF) assets this year, the strategy is to expand its pension business from saving for retirement to spending in retirement.
Shinhan Asset Management plans to establish four "Shinhan Peace of Mind RIF" funds on the 16th of this month, according to financial investment industry sources on the 13th. The products, with target withdrawal end dates of 2040 and 2050, will each be sold in a standard version and a monthly payout version. A retirement income fund (RIF) is an asset allocation fund for investors drawing down assets after retirement, and the monthly payout version targets an annual distribution rate of about 8%.
The products are designed around when investors plan to draw down living expenses. While TDFs focus on accumulating assets until an expected retirement date, RIFs consider both the cash flow needed during the withdrawal period and the assets that will remain after withdrawals end. The 2040 and 2050 labels in the product names refer not to expected retirement years but to target withdrawal end years. After those dates, the monthly payout versions stop distributions and shift to a portfolio centered on stable assets. Investors who need a fixed monthly income can choose the monthly payout version, while those who want to decide the timing and size of withdrawals themselves can opt for the standard version.
The Shinhan Peace of Mind RIF funds invest across domestic and overseas stocks and bonds, real estate investment trusts, infrastructure and gold to slow the depletion of assets while investors withdraw living expenses. The baseline split between risk assets and stable assets is 80 to 20 for the 2040 funds and 90 to 10 for the 2050 funds. Funds with longer withdrawal periods carry a higher share of risk assets to pursue long-term returns.
For example, an investor who puts 100 million won into the 2040 monthly payout fund would receive about 670,000 won a month for 15 years, or 120 million won in total, and still have about 60 million won left, according to the company's calculation. The figures are projections based on simulations, and the remaining balance reflects a scenario in the bottom 5% of simulation results. Actual distributions and remaining assets may vary with investment performance, and assets could be exhausted before the target date.
Shinhan Asset Management's push into retirement spending is seen as an effort to extend its expanded position in the TDF market into post-retirement wealth management. The firm's TDF assets stood at 2.1177 trillion won as of the 8th of this month, up 750.2 billion won, or 54.9%, from 1.3675 trillion won at the end of last year, according to fund tracker Zeroin. That was the largest increase among asset managers this year, lifting the firm to fourth place from fifth at the end of last year. Its market share rose 2.31 percentage points to 11.3% from 8.99% over the same period.
Returns on its main TDFs also beat the average for funds with the same target retirement year. As of the 8th, the Shinhan Peace of Mind Qualified TDF 2055 returned 17.63% over the past year, ranking first among funds with that target year. The Shinhan Fast Response Qualified TDF 2030(H) returned 16.30%, beating the 8.82% average for funds with the same target year by 7.48 percentage points and posting the highest return in that group. "The role of an asset manager now is to help people build a stable life after retirement with the assets they have accumulated," said Lee Seok-won, chief executive of Shinhan Asset Management. "We will be a partner that takes responsibility for the entire investment process, from accumulation to withdrawal."