'Value Up No.1' Premature Promotion... Financial Supervisory Service Warns Asset Management Company

"Thorough Review of Fund Registration Documents and Guidance for the Asset Management Industry"

Seoul Yeouido Financial Supervisory Service building. Photo by Younghan Heo younghan@

The Financial Supervisory Service (FSS) has issued a warning to some asset management companies that used the corporate Value-Up program to promote their own funds. These companies are prohibited from using the term "Value-Up" in fund names or promotions until the Value-Up index for the fourth quarter of this year is finalized.

On the 26th, the FSS stated, "Recently, some asset management companies have attempted to use the government's corporate Value-Up support measures as a means of fund promotion," urging asset managers and investors to exercise caution.

According to the FSS, Company A promoted on its website and in media articles that it was the "first domestic Value-Up ETF (Exchange-Traded Fund) investing directly in Value-Up beneficiary companies." Company B attempted to include the term "Value-Up" in the name of a new fund primarily investing in companies with low PBR (Price-to-Book Ratio) stocks or expected increases in ROE (Return on Equity).

The FSS believes that using such promotional phrases before the Value-Up program is finalized could distort "Value-Up" into an investment theme, potentially causing investor harm and undermining the policy value of the Value-Up program. In particular, if investors mistake the fund for a government policy-based Value-Up ETF, it could be interpreted as a violation of the Financial Consumer Protection Act. The government plans to develop the Korea Value-Up index in the third quarter and launch related ETFs in the fourth quarter.

The FSS stated, "We will thoroughly review fund registration documents and guide the asset management industry to prevent investor harm caused by misuse or overuse of the Value-Up term."

Investors should be aware that investing in funds claiming to benefit from Value-Up may result in unexpected losses if the stocks included in the fund are not incorporated into the index or due to other unforeseen reasons.

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