ETF Popularity Soars as Asset Managers’ Quarterly Operating Profits Top KRW 2 Trillion

[Financial News] Asset management companies recorded more than KRW 2 trillion in operating profit in the second quarter, buoyed by the popularity of exchange-traded funds (ETFs).
According to the Financial Supervisory Service on the 11th, the combined operating profit of 513 asset management companies reached KRW 2.4195 trillion in the second quarter, up 227.5% from the same period a year earlier. It also rose 78.9% from the previous quarter. Net profit came to KRW 2.6889 trillion, increasing 83.4% from the previous quarter and 214.3% year on year.
Of the 513 companies, 293, or 57.1%, posted profits. The proportion of loss-making companies rose to 42.9%, up from 37.6% in the previous quarter. Among 436 private asset managers, the share of loss-making companies climbed to 47.9%, an increase of 6.4 percentage points from 41.5% in the previous quarter.
Asset management companies’ fee revenue totaled KRW 2.6072 trillion in the second quarter, up 37.7% from the previous quarter. Fund-related fees rose 39.1% to KRW 2.0326 trillion, while discretionary investment advisory fees increased 33.1% to KRW 574.6 billion.
As of the end of June, asset management companies’ assets under management totaled KRW 2,777.5 trillion, an increase of KRW 421.8 trillion, or 17.9%, from the end of March. Public funds reached KRW 894.4 trillion, up 27.2%, or KRW 191.9 trillion, from the previous quarter, supported by gains in the KOSPI Composite Index and the expansion of the ETF market.
Private funds totaled KRW 833.5 trillion, up 6.2%, or KRW 48.7 trillion, from the previous quarter. However, they remained relatively stagnant compared with public funds.
Discretionary investment management assets rose 20.9% from the previous quarter to KRW 1,046.6 trillion. Of this total, equity-type assets accounted for KRW 416.6 trillion, while fund-of-funds assets stood at KRW 25.9 trillion.
The Financial Supervisory Service explained, "Asset management companies posted strong quarterly earnings, helped by the rise in domestic stock indexes. However, risks have emerged, including the concentration of stock market investment funds in certain sectors and stocks, excessive short-term trading related to ETFs and other products, and leveraged investments. Uncertainties stemming from rising domestic and overseas interest rates and exchange rates also remain."
It added, "The Financial Supervisory Service will continue efforts to ease market volatility, including by curbing leverage and debt-financed investing. We will also continue supervisory and regulatory improvements so that the asset management industry can achieve sound growth by restoring investor confidence and encouraging long-term investment."
[email protected] Lim Sang-hyeok Reporter