The Dimifund, a retirement product that seeks medium risk and medium revenue, is facing difficulties due to the lack of cooperation from banks, which are the largest sales channels for financial products. The Korea Financial Investment Association, which led the launch of the Dimifund, plans to secure at least one of the four major banks (KB Kookmin, Shinhan, Hana, Woori) as a sales channel, but the banks are showing a lukewarm response.
According to the financial investment industry, the primary sales channel for the 25 Dimifunds officially launched on Sept. 25 last year is entirely composed of 14 securities firms. Consequently, the Dimifund has been struggling with external expansion. The asset management of the Dimifund, which was about 80 billion won at the time of its launch last year, recorded 210 billion won as of the end of April this year, accumulating about 18.5 billion won each month. Although it has increased, the prevailing assessment is that the speed is not what was expected when considering the size of the retirement market.
The largest sales channel for financial products in South Korea is banks. For asset management companies, whether banks expose their products in the fund lineup directly correlates with performance. This background explains why the growth rate of the Dimifund, which has only secured securities firms as a sales channel, is inevitably slow.
Banks do handle the Dimifund. However, this is only in cases where asset managers repackage existing funds as the Dimifund. There are no banks actively recommending newly launched Dimifunds to customers. An industry insider noted, 'While some holding company banks do handle Dimifunds from affiliated asset managers, this is not on a large scale.'
The Korea Financial Investment Association continues to request cooperation from major banks for the sale of the Dimifund. However, all banks are currently uncooperative. Even Bank A, which had been somewhat cooperative with the financial investment industry, is reported to have rejected the sale of the Dimifund. An industry insider mentioned, 'The Korea Financial Investment Association had pinned a glimmer of hope on Bank A, but the unexpectedly cold response left them disheartened.'
The Dimifund is a retirement product that limits the stock allocation rate to less than 50% and seeks market-neutral performance around 5%. It was introduced to supply a more stable 'catfish' product in the domestic retirement pension market, which has been dominated by life cycle funds (TDF) that adjust portfolios in line with retirement timings.
The market voices collective opinions that the Dimifund can only survive if the Korea Financial Investment Association secures at least one major bank as a sales channel. However, the banking sector does not feel a compelling reason to assist other industries and is currently in an atmosphere of low expectations due to the upcoming June 3 early presidential election.
The Korea Financial Investment Association stated that as the Dimifund aims to attract principal-protected retirement pension subscribers, its presence will become more apparent over time. A spokesperson from the Korea Financial Investment Association said, 'The Dimifund diversifies investments in stocks, bonds, and alternative assets like the National Pension Service, providing stability akin to deposits while ensuring higher revenue than deposits.' They added, 'There will definitely be demand among conservative subscribers who are determined to protect their retirement funds and seek revenue above bank interest rates.'
Korea Financial Investment Association Chairman Seo Yoo-seok said, 'I will meet with the chief responsible for bank pensions to promote the Dimifund.'