Despite a surge in assets under management for major asset management firms due to the booming exchange-traded fund (ETF) market, profitability has not seen a corresponding increase. This is attributed to low management fees and intense competition. In contrast, private asset managers that do not handle ETFs have dominated the top ranks in net profit.
According to the financial investment industry on August 25, Mirae Asset Global Investments topped the net profit rankings for the first half of the year, reporting 906.3 billion won. This performance reflects growth in its ETF business and overseas subsidiaries in the U.S. and Hong Kong. Notably, 768.5 billion won was attributed to equity method gains, significantly boosting its accounting net profit. Korea Investment Value Asset Management secured the second spot with a net profit of 274.6 billion won, followed by Tiger Asset Management with 183.8 billion won, DS Asset Management with 177.3 billion won, Timefolio Asset Management with 156.1 billion won, Life Asset Management with 153.8 billion won, Taurus Asset Management with 153.3 billion won, and Seugi Asset Management with 132.7 billion won.
Samsung Asset Management, the leader in the ETF market, ranked ninth in net profit with 129.4 billion won. Other comprehensive asset management firms primarily dealing with ETFs ranked even lower, with KB Asset Management at 11th (78.3 billion won), Kiwoom Investment Asset Management at 14th (51.5 billion won), Shinhan Asset Management at 17th (47.4 billion won), and Korea Investment Trust Management at 19th (43.7 billion won).
A key characteristic of the asset management rankings for the first half of the year is the underperformance of comprehensive asset management firms that primarily engage in ETF operations. Only two firms, Mirae Asset Global Investments and Samsung Asset Management, made it into the top 10 by net profit. In contrast, private asset managers have made significant gains in profitability.
Korea Investment Value Asset Management, the second-highest in net profit, reported 76.8 billion won in securities evaluation and disposal gains and 74.3 billion won in equity method gains in the second quarter. Notably, Korea Investment Value Asset Management effectively exited the ETF business by delisting both of its 'VITA' brand products at the end of June, focusing solely on proprietary asset management to enhance profitability.
The relatively poor profitability of comprehensive asset management firms is due to the nature of the ETF business. While management fees increase with growing assets under management, the low fee rates limit profitability. Additionally, fierce competition for market share has led to rising product development and marketing costs. Advertising expenses for the surveyed asset managers in the first half of the year reached 39.686 billion won, a 49.6% increase from 26.531 billion won in the same period last year. The top five firms in advertising expenses were all comprehensive asset management firms actively managing ETFs.
In contrast, private asset managers can charge relatively higher management fees compared to public funds or ETFs, and they can secure performance fees once certain return thresholds are exceeded. Coupled with gains from asset evaluations and disposals, their profits have rapidly expanded in line with a booming stock market, according to industry analysis.
However, as profits have increased, so have personnel expenses for private asset managers. Their salary expenditures in the first half of the year reached 1.03 trillion won, a 35.7% increase from the same period last year. Taurus Asset Management saw salaries surge from 2.4 billion won to 48.1 billion won, a 1,934.3% increase, while DS Asset Management's salaries rose from 5.3 billion won to 19.4 billion won, a 263.8% increase. Korea Investment Value Asset Management also increased salaries from 4.1 billion won to 14.1 billion won, a 246.9% rise, and Timefolio Asset Management's salaries jumped from 500 million won to 4.5 billion won, a 786.1% increase.
An industry insider noted, "Private asset managers experience significant performance volatility depending on market conditions, while ETFs can secure relatively stable management fee income. There is a possibility that the performance rankings will differ in the second half of the year compared to the first half."
* This article has been translated by AI.
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