The Financial Services Commission in Korea has recently designated Mirae Asset Securities and Korea Investment & Securities as the first ‘IMA operators,’ setting the stage for the introduction of a new type of comprehensive investment account (IMA) product. These accounts promise principal protection and aim to offer returns higher than traditional bank deposit rates. This move comes eight years after the relevant regulations were first established.
The IMA is essentially a ‘corporate finance specialized’ comprehensive investment account, offering a de facto principal guarantee. Large securities companies will gather funds from customers through IMA and invest these in corporate loans, bonds, real estate, etc., generating revenue which is then distributed back to clients. Principal amounts are guaranteed upon maturity.
The impetus for IMA is to encourage active corporate financing and the supply of venture capital, with more than 70% of the funds directed towards corporate financing. Specific details such as investment destinations, maturity periods, expected returns, and performance fees will vary by product. For example, low-return stable products might target annual returns of 4.0–4.5%, medium-return general products 5.0–6.0%, and high-return investment type products 6.0–8.0%. If a company achieves returns exceeding set benchmarks, 30-40% of the excess is given as a performance fee.
The financial authorities have indicated that the first IMA products, expected in early December, will likely be low-risk stable products. Despite IMAs not being covered under the Depositor Protection Act—which means they don’t guarantee returns like regular deposits—the securities firm generally guarantees the principal unless it faces extreme conditions like bankruptcy.
Considering that current major bank deposit interest rates hover around 3%, these IMA products present a comparatively safe yet potentially more lucrative investment option for investors. Mirae Asset Securities is planning to start with results-based IMA 1 products and expand to include dividend and project (innovation growth company inclusion) products later. Meanwhile, Korea Investment & Securities intends to initially provide stable products to build market trust, gradually expanding their product portfolio.