ETF 3rd Place Battle "Korea's First, Korea's Only, Change"

Mid-sized Asset Managers Ignite Fierce Battle for 3rd Place in ETF Market Share
Hanwha Asset Management Launches Series of 'First-ever' Domestic ETFs
Shinhan Asset Management Targets Market with 'Only Domestic' ETFs
KB Asset Management Establishes 'Digital Asset Committee' to Prepare for Changes
Korea Investment Management Prepares for 'Changes' in Second Half of the Year

[Asia Economy Reporter Junho Hwang] Asset management companies, sensing a tectonic shift in the exchange-traded fund (ETF) market, have launched ETFs emphasizing various differentiations, sparking a battle for market share. Although the top one or two firms dominate over 78% of the market due to industry characteristics, recent increased stock market volatility has shaken their positions, prompting small and medium-sized asset managers to tighten their competitive reins.

Hanwha Launches 'Korea's First' Series of ETFs

According to the financial investment industry on the 23rd, Hanwha Asset Management, ranked 7th in the industry by ETF net assets (market share 2.23%), will launch the ‘ARIRANG iSelect Aerospace & UAM ETF’ on the 29th. This follows the ‘ARIRANG Global Rare Earth Strategic Resource Companies MV ETF’ and the ‘ARIRANG Global Hydrogen & Next-Generation Fuel Cell MV ETF’ launched earlier this year, marking Korea’s first ETFs in these categories.

Hanwha aims to capture market leadership by being the first to launch various thematic ETFs. Mirae Asset preemptively launched thematic ETFs last year, increasing its market share and narrowing the gap with current leader Samsung Asset Management to within 5 percentage points. Hanwha is benchmarking this trend.

This product invests in the aerospace theme, including companies benefiting from the entire supply chain of satellite manufacturing, launch, operation, and services, as well as urban air mobility (UAM). The underlying index tracks iSelect Aerospace & UAM. Key holdings include Korea Aerospace Industries (12.09%), which possesses UAM vehicle development technology; Hanwha Aerospace (11.02%), Korea’s sole gas turbine engine manufacturer; Hanwha Systems (9.59%), which holds electronic satellite communication antenna technology and UAM solutions; and Hyundai Motor Company (8.12%), which plans to establish a local UAM subsidiary in the U.S.

Shinhan Competes with 'Korea's Only' ETFs

Shinhan Asset Management, ranked 8th (0.78%), is also differentiating itself by launching various thematic ETFs that are ‘Korea’s only’ products. Their strategy is to compete with differentiated returns by addressing shortcomings of existing products. For example, among the four China STAR Market (China’s Nasdaq) ETFs launched earlier this year, Shinhan is the only one offering an ‘active’ product (SOL China Emerging Industries Active). This is based on the calculation that, due to government interference and information limitations, an active management approach by a manager directly responding to the market is more beneficial for improving returns than a passive strategy. They also added an ETF targeting the global carbon emissions market (SOL Global Carbon Emissions Futures IHS), rather than Europe. This is a strategic move anticipating the possible inclusion of China, known as the world’s largest emitter, in the carbon emissions market. Shinhan established an ETF center last year and is focusing on launching such ‘Korea’s only’ ETFs.

Korea Investment Management Prepares for 'Transformation' in Second Half

Bae Jae-gyu, CEO of Korea Investment Trust Management, is being interviewed on the 16th at Korea Investment Trust Management in Yeouido, Seoul. Photo by Kang Jin-hyung aymsdream@

Korea Investment Management, ranked 4th in the industry (4.48%), is preparing to solidify its position in the ETF market through major changes in the second half of this year. The start of this transformation was the appointment of former Samsung Asset Management Vice President Bae Jaegyu, who played a pivotal role in introducing ETFs to the domestic market and helping Samsung Asset Management maintain its top position, as the new CEO. As the driving force behind change, CEO Bae plans to launch new ETF brands and products featuring Korea Investment Management’s unique characteristics in the second half. Notably, Korea Investment Management is one of the few top ETF firms, along with Mirae Asset, to have increased net assets (a 3.45% increase from the end of last year to the 23rd). It is recognized for showing strength during periods of high stock market volatility. The KINDEX G2 Electric Vehicle & Autonomous Driving Active ETF, launched last month, ranked first in individual net purchases (22.69 billion KRW) among 31 active ETFs (excluding bonds) within about a month of listing.

This content was produced with the assistance of AI translation services.