KB Asset Management Aims for Industry No.1 with 'Direct Indexing' Platform

[Asia Economy Reporter Junho Hwang] KB Asset Management, which declared the vision of "becoming the No.1 asset management company by 2030," has identified "direct indexing" as a new growth engine and has begun building a platform.

KB Asset Management announced on the 27th that since forming a related Task Force Team last September, it has completed a system development contract with Quantit, a specialized development company, and plans to commercialize the direct indexing business next year.

Direct indexing refers to personalized portfolio investment strategies and overall asset management. The core is to create a personalized investment index reflecting individual preferences and investment objectives (indexing), and to provide technology and services that directly (direct) manage individual stocks within the customer's account.

For example, the easiest way for an investor positive on the Korean market to invest is through KOSPI 200 ETFs like KBSTAR200. However, if an investor is negative about a specific sector, they can create and be provided with their own KOSPI 200 portfolio excluding that particular sector.

Although direct indexing is still unfamiliar in Korea, the U.S. market is rapidly shifting toward personalized products. According to global consulting firm Oliver Wyman, the U.S. direct indexing market size is expected to grow from 500 trillion KRW in 2020 to 2,150 trillion KRW by 2025.

Kim Hong-gon, Executive Director of the Index Quant Division at KB Asset Management, said, "In the future, direct indexing is expected to evolve from an algorithm-based form relying on past data to a platform business based on direct indexing that allows access to highly advanced research materials and expert advice."

KB Asset Management plans to build a direct indexing platform that enables investors to easily create and invest in their own indices. In particular, it plans to add various asset management functions within the platform, such as tax-saving asset management, similar to the U.S. market.

Lee Hyun-seung, CEO of KB Asset Management, stated, "Looking back over the past 10 years, the first five years saw equity funds as the company's growth engine, and the recent five years marked a leap forward based on alternative investments. We aim to take the lead in the direct indexing sector as the future growth engine, staying one step ahead of others."

KB Asset Management, ranked 5th in the industry in 2012 with 30 trillion KRW in assets under management, has grown remarkably over the past decade to become the 3rd largest asset management company with 120 trillion KRW in assets under management. In particular, alternative investment assets under management have grown from 8.4 trillion KRW to 21.3 trillion KRW over the past five years, ranking first in the industry.

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