Does priority allocation of IPO shares guarantee fund returns?

No. IPO shares can trade below the offer price after listing, and because participating funds share the separate allocation according to net assets and other factors, the amount each fund receives may be limited.

The Financial Supervisory Service found that, partly because of the launch of KOSDAQ venture funds (April 2018), the book-building competition ratio for KOSDAQ IPOs rose from 325:1 in 2017 to 488:1 in 2018; the fiercer the competition, the smaller the allocation can be. Fund performance also depends heavily on price movements in other holdings, such as unlisted and small-cap shares.