South Korean workers with Individual Retirement Pension (IRP) accounts have seen strong returns this year, with many top investors betting on U.S. big tech stocks and Indian equity funds to grow their retirement savings. As a tax-advantaged retirement vehicle, the IRP allows annual contributions up to 18 million won ($13,000), with half of that amount—9 million won—eligible for tax deductions, making it a popular savings strategy alongside the Individual Savings Account (ISA).

According to data provided by Mirae Asset Securities to Maeil Business Newspaper, the top 1 percent of IRP investors—1,641 account holders—achieved an impressive average return of 27.07 percent from January to September 2024. Their success, analysts say, lies in their bold investment decisions, shifting assets towards high-growth sectors and reducing their reliance on principal-guaranteed products.

Principal-guaranteed investments now make up only 10 percent of these investors’ portfolios—a dramatic drop from two years ago, when they accounted for 70 percent. Instead, exchange-traded funds (ETFs) and mutual funds dominate their portfolios, comprising 74 percent and 12 percent of total assets, respectively.

Nine of the top ten holdings by balance among these investors were ETFs. The most popular was the TIGER U.S. Tech TOP10 INDXX ETF, with a total balance of 13.7 billion won. Other leading ETFs in their portfolios similarly focused on U.S. big tech stocks, reflecting a heavy investment in technology giants.

While many investors initially concentrated their IRP portfolios on U.S. tech stocks earlier in the year, they have since diversified into other sectors. This shift is evident in the reduced ETF holdings, which dropped from 84 percent of portfolios in June to 74 percent by the end of September. Investors reallocated some of their capital toward mutual funds targeting India, where the stock market has experienced rapid growth.

The growing appeal of Indian equities is further highlighted by the composition of top mutual fund holdings. Half of the top ten funds by balance focus on India, including the Mirae Asset India Small and Mid-Cap Focus Equity Fund, which ranked seventh overall.

By Kim Tae-sung and Minu Kim
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