The Seoul Metropolitan Government will create a 1 trillion won ($886 million) investment fund to support its new economic projects, officials said on Thursday.

The projects cover wide ranging fields including finance, tourism, biomedical technology and fashion.

The fund the capital city government plans to start will take the form of a fund of funds, or FOF that invests in some collective investment funds like a mutual or hedge fund rather than a fund directly investing in individual securities. A fund of funds is regarded as an effective strategy to diversify risk factors.

It would be the first time the city government has established an FOF.

Officials said the fund aims to promote eight key next-generation industries, which the city designated as Seoul’s growth engines for the next decade.

The eight fields cover finance, business service, tourism, information technology convergence, biomedical and green technology, design and fashion.

The municipal government began receiving applications to recruit a contractor who will conduct a feasibility study on the plan and find ways to create and manage the fund. The application period ends March 5.

Under the so-called “Seoul Economy Vision 2020” the city will also encourage private investment in venture businesses in the eight fields.

The city has three funds to support culture, bio industries and environmentally friendly jobs, with each belonging to the funds of funds run by the Ministry of Knowledge Economy and Small and Medium Business Administration. But their returns have been not so high, officials said.

By Lee Woo-young (wylee@heraldcorp.com)