KB Asset Management Completes Development of Direct Indexing Solution ‘MYPORT’

"Individual as Fund Manager" Development of Direct Indexing Solution

KB Asset Management has developed a direct indexing solution that allows individual investors to become fund managers.

After deciding to enter the direct indexing business in September last year, the company spent six months internalizing the operational experience and capabilities of its in-house fund managers, including PhDs in artificial intelligence investment engineering and financial engineering. Starting from the end of April, it will officially commercialize the solution, beginning with a non-face-to-face advisory solution through securities firms.

Direct indexing is still a relatively unfamiliar field in Korea, but 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 U.S. direct indexing market size was 185 trillion KRW in 2018, 385 trillion KRW in 2019, and 500 trillion KRW in 2020, with expectations to grow to 2,150 trillion KRW 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 2021. Prior to that, in November 2020, BlackRock, the world’s largest asset manager, acquired Aperio, both of which are related to the direct indexing field.

KB Asset Management completed the development of the solution and selected the name ‘MYPORT’ through an internal idea contest. They also established the slogan ‘Your Personalized Investment Solution MYPORT.’ The internal contest was very popular, with over 200 ideas submitted. The final name, MYPORT, is intuitive and familiar, meaning ‘the portfolio I create,’ and the company is currently in the process of registering the trademark.

By using KB Asset Management’s MYPORT solution, customers can comfortably build and edit their own portfolios in line with the era of hyper-personalization. Every week, AI utilizes big data from global markets to inform users of trending themes and provides domestic investment portfolios related to those themes. The first phase of the solution, introduced in April, will be limited to domestic indices, with a second phase expanding to overseas indices planned within the year.

The investment universe is not limited to the KOSPI 200 or KOSDAQ 150 but includes seven diverse universes (entire KOSPI, entire KOSDAQ, KOSPI 200, KOSDAQ 150, KRX 300, KOSPI + KOSDAQ, KOSPI 200 + KOSDAQ 150 + KRX 300), covering all stocks listed domestically. It also allows portfolio editing reflecting individual investment preferences targeting KBSTAR ETFs, enabling the concept of ‘my own ETF’ investment.

The MYPORT solution enables the creation of personalized portfolios through five steps: ‘Strategy Selection,’ ‘Strategy Editing,’ ‘Strategy Setting,’ ‘Strategy Details,’ and ‘Investment Decision.’ First, in ‘Strategy Selection,’ users can utilize pre-made themes, sectors, or strategies of investment masters, or choose the ‘Create My Own Strategy’ option to invest using various concepts beyond basic indices (KOSPI, KOSDAQ, etc.). If selecting the investment masters’ strategies, users can choose from 15 global masters’ strategies and edit them by investment factor styles to create their own strategy.

In the second step, ‘Strategy Editing,’ users can select one of three options based on their investment knowledge: ‘Pre-set Investment,’ which invests in pre-made portfolios as is; ‘Simple Investment,’ which adds investment factor styles (value, growth, dividend, quality, etc., totaling nine); and ‘Pro Investment,’ a professional-level option applying investment criteria used by quantitative analysts (selecting from over 250 individual investment criteria), allowing investment at a level matching the user’s knowledge.

In the third step, ‘Strategy Setting,’ users reflect their individual investment preferences by selecting investment amount, optimization options, rebalancing frequency, simulation start date, and can exclude or re-include stocks.

The fourth step, ‘Strategy Details,’ provides detailed analysis of backtest results over the past three years or more, and after simulated investment, offers performance analysis of daily and cumulative returns. This allows users to visually assess the performance of their created portfolio through graphs, check profit analysis, sector and industry composition, stock composition, and rebalancing history. Users can also compare their strategy with the base strategy and indices (such as KOSPI).

Finally, in the ‘Investment Decision’ step, individuals can save their completed portfolio in a storage box, proceed with simulated investment, or enter into an investment contract.

For example, an investor interested in the secondary battery market can create ‘my own secondary battery portfolio’ by increasing the weight of the battery recycling sector in a pre-set portfolio using a master’s strategy focused on long-term investment in innovative companies. This makes it easy for individuals to become fund managers.

Kim Hong-gon, Head of the Index Quant Division at KB Asset Management, said, “In the future, MYPORT will grow beyond an algorithmic form into a platform business where users can receive highly advanced research materials and expert advice. By providing personalized investment solutions, we will take the lead in improving our customers’ returns.”

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