KB Asset Management, Leading 'Direct Indexing' as Future Growth Engine (Comprehensive)

[Asia Economy Reporter Hwang Yoon-joo] KB Asset Management, which declared itself the industry leader by 2030, has identified direct indexing as a new growth engine. While direct indexing is still an unfamiliar field in Korea, in the U.S., it is rapidly evolving into personalized products within the well-established ETF market.

According to global consulting firm Oliver Wyman, the direct indexing market size in the U.S. was 185 trillion won in 2018, 385 trillion won in 2019, and 500 trillion won in 2020, with expectations to grow to 2,150 trillion won by 2025. Vanguard (the world’s second-largest asset manager), which had never conducted M&A since its founding, acquired Just Invest, a tax-managed personalized asset management service provider, in July last year. Prior to that, in November 2020, BlackRock, the world’s largest asset manager, acquired Aperio, both related to the direct indexing field.

Since forming a Task Force Team last September, KB Asset Management has completed a system development contract with Quantit, a specialized development company, aiming for commercialization next year.

KB Asset Management CEO Lee Hyun-seung 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 a future growth driver, staying one step ahead of others."

KB Asset Management, ranked 5th in the industry in 2012 with 30 trillion won in assets, has grown remarkably over 10 years to become the 3rd largest asset manager with 120 trillion won in assets under management. In particular, alternative investment commitments have grown from 8.4 trillion won to 21.3 trillion won over the past five years, ranking first in the industry.

Direct indexing refers to the technology and service that constructs personalized investment indices reflecting individual preferences and investment objectives (indexing) and manages them directly at the individual stock level within the client’s account (direct).

For example, an investor positive on the Korean market can easily invest by purchasing KOSPI 200 ETFs like KBSTAR200. However, if an investor is negative on a specific sector, they can create their own KOSPI 200 portfolio excluding that sector and purchase it in bulk. Personalized portfolio investment like this is the core of direct indexing.

KB Asset Management plans to implement differentiated services from other financial companies based on the know-how accumulated over more than 30 years of developing and managing various products.

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