Stock Accounts Turn Pale Blue... Asset Management Firms' Investment Returns Plunge 66%

[Asia Economy Reporter Ji Yeon-jin] As the domestic and international stock markets have continued to decline this year, domestic asset management companies have suffered massive investment losses.

According to the '2022 Q1 Asset Management Company Business Performance (Provisional)' announced by the Financial Supervisory Service on the 8th, the net profit of asset management companies in the first quarter of this year was 374.7 billion KRW, which increased by 10.4% compared to the previous quarter but decreased by 36.4% compared to the same period last year. Operating profit was 404.3 billion KRW, down 34.9% from the previous quarter.

Fee income was 985.1 billion KRW, down 28.8% from the previous quarter, with fund fees (792.1 billion KRW) and advisory fees (193.0 billion KRW) decreasing by 31.4% and 15.2%, respectively, compared to the previous quarter. In particular, due to the recent rise in interest rates and the decline in stock prices, securities investment gains and losses from managing proprietary assets amounted to only 63.2 billion KRW, down 66.1% from the previous quarter.

As of the end of March this year, the assets under management (fund trust assets and discretionary investment contracts) of asset management companies stood at 1,364.6 trillion KRW. This is a record high, increasing by 42.4 trillion KRW (3.2%) compared to the end of last year, maintaining an upward trend.

Fund trust assets were 819.5 trillion KRW, and discretionary investment contracts were 545 trillion KRW, increasing by 4.3% and 1.6%, respectively, compared to the end of last year. In the case of public funds (299.6 trillion KRW), trust assets increased by 14.5 trillion KRW from the previous quarter, mainly driven by money market funds (MMF, increased by 1.19 trillion KRW) and derivatives (+100 billion KRW).

Private fund trust assets (519.9 trillion KRW) increased by 19.3 trillion KRW compared to the end of last year, mainly due to MMF (+5.5 trillion KRW), real estate (+3.7 trillion KRW), and special assets (+3.4 trillion KRW).

As of the end of March, there were a total of 361 asset management companies (76 public funds and 285 general private funds), an increase of 13 companies compared to the end of last year. The number of employees was 11,717, up 608 (5.5%) from the end of last year.

Looking at the profit and loss status by company, out of 361 asset management companies, 245 posted profits (448.9 billion KRW), but 116 recorded losses (-74.3 billion KRW). The ratio of loss-making companies was 32.1%, an increase of 20.9 percentage points compared to last year.

In particular, among general private fund managers, 35.8% (102 out of 285 companies) recorded losses, increasing the ratio of loss-making companies by 24.4 percentage points compared to last year. The Financial Supervisory Service analyzed, "Due to the deterioration of the operating environment such as interest rate hikes and stock price declines, the ratio of loss-making companies has significantly increased, worsening the profitability indicators of asset management companies."

The return on equity (ROE) of asset management companies was 13.0%, up 1.0 percentage point from the previous quarter. Compared to the same period last year, it fell by 11.7 percentage points.

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