KB Asset Management established a dedicated Active ETF division in May and set a target to surpass 4 trillion won in assets under management with over 10% market share in domestic equity active ETFs within three years, according to division head Kwak Chan in an interview on the 27th. The division plans to launch 2 to 3 active ETFs annually to strengthen market competitiveness. Kwak cited the domestic equity active ETF market's nearly 200% growth this year as the driver behind the strategic focus, noting that while the segment represents 30 trillion won of the 500 trillion won total ETF market, its annual growth rate now exceeds that of passive products.
KB Asset Management Establishes Dedicated Active ETF Division in May
The Active ETF division was established in May under KB Asset Management's equity operations division as a dedicated organization for active ETF products. Kwak Chan, who leads the division, joined KB Asset Management upon the division's launch after serving as an analyst at Shinhan Securities and head of corporate analysis at Korea Investment Trust, specializing in the technology sector. KB Asset Management currently operates 4 domestic equity active ETF products with total net assets of approximately 620 billion won.
Kwak stated that the division was formed in response to growing investor interest in generating excess returns compared to benchmark indices. He noted that active ETF product launches are expected to increase over the next 2 to 3 years.
Active ETF Market Grew Nearly 200% This Year
Kwak explained that domestic equity active ETFs represent 30 trillion won of the 500 trillion won total ETF market but have grown nearly 200% this year. He stated that the annual growth rate of active products currently exceeds that of passive products.
Regarding recent slower fund flows into active ETFs, Kwak attributed this to market conditions. He explained that funds concentrated in passive products during the upward market, and after a sharp market decline, investors were locked in loss positions, making it difficult to change strategies. Kwak stated that as the market stabilizes and investor sentiment recovers, fund movement into active ETFs will gradually become more active.
Kwak also stated that funds are likely to flow into the KOSDAQ sector. He explained that previously, liquidity concentrated in large-cap semiconductor stocks and single-stock leveraged ETFs, while weakened bio investment sentiment made it difficult for funds to enter KOSDAQ. However, he stated that future fund dispersion into KOSDAQ is likely as concentration in memory stocks eases. Kwak stated that memory companies have been hesitant to share excess profits with semiconductor materials, parts, and equipment partner companies, but the atmosphere is expected to change starting in the second half. He stated that as memory companies transition to long-term supply agreements (LTA), long-term profit visibility is secured, and trickle-down effects will appear for materials, parts, and equipment companies.
Kwak analyzed that individual investors' expected returns are also shifting from KOSPI to KOSDAQ. He stated that as memory sector stock prices have already risen significantly, the perception that additional gains are difficult is spreading, lowering expected returns compared to the first half. Kwak stated that liquidity is likely to gradually disperse into the KOSDAQ market, where expected returns relative to risk have increased.
RISE KOSDAQ Covered Call Active ETF Launches on the 28th
KB Asset Management will launch the 'RISE KOSDAQ Covered Call Active ETF' on the 28th as the division's first strategic product following the Active ETF division's establishment. The decision to select a KOSDAQ active ETF as the first strategic product reflects this market assessment.
The product will allocate over 50% of its portfolio to semiconductor materials, parts, and equipment sectors listed on the KOSDAQ market, directly targeting trickle-down effects from large-cap stocks. To defend against KOSDAQ market volatility, the product incorporates a covered call strategy. The structure generates excess returns to track upward trends during rising markets, while option premiums offset declines during falling or sideways markets. Call option selling ratios are flexibly adjusted between 0% and 100% to target an annual premium of 15%.
Additional differentiating features include a concentrated strategy with holdings limited to under 20 stocks, co-management by three specialists in semiconductors, secondary batteries, and bio sectors, and the industry's largest in-house research team. Kwak stated that holding too many stocks makes true 'active' management difficult, so the division will pursue a concentrated portfolio strategy. He stated that as the industry's most proactive launcher of a dedicated Active ETF division, the firm will secure a solid market share.
FAQ
What is KB Asset Management's target for domestic equity active ETFs within 3 years?
KB Asset Management targets surpassing 4 trillion won in assets under management with over 10% market share in domestic equity active ETFs within 3 years, according to division head Kwak Chan in an interview on the 27th. The firm plans to launch 2 to 3 active ETFs annually.
When will the RISE KOSDAQ Covered Call Active ETF launch?
KB Asset Management will launch the 'RISE KOSDAQ Covered Call Active ETF' on the 28th. The product allocates over 50% to KOSDAQ semiconductor materials, parts, and equipment stocks and uses a flexible covered call strategy with call option selling ratios adjusted between 0% and 100% to target an annual premium of 15%.
How much did the domestic equity active ETF market grow this year?
The domestic equity active ETF market grew nearly 200% this year, according to Kwak Chan. While the segment represents 30 trillion won of the 500 trillion won total ETF market, its annual growth rate now exceeds that of passive products.
