[Reporter’s Notebook] Countless Warnings Ignored... The 57.9 Billion Won Retail Investor Outrage

'57,976,400,000 won'

This is an enormous sum—an office worker earning an annual salary of 50 million won would have to save for 1,159 years without spending a single penny to accumulate this amount. This is also the amount that individual investors poured into the ACE US Space Tech Active ETF in just one day, on June 12. Nearly half of the 119.4 billion won in net individual purchases accumulated over the week was concentrated in a single day.

There are a total of nine "space ETFs" listed in Korea. Most of them announced after listing that they intended to include SpaceX. Among them, Korea Investment Management made a major announcement on June 4, a week before the expected SpaceX listing, that it would participate in the IPO. It promoted itself as the only domestic asset manager to officially participate in the IPO, claiming that investors could profit from the difference between the offering price and the first-day price increase. Individual investors, trusting the asset manager, rushed to get on the "last bus" just before the listing.

The situation reversed dramatically in just one day. Mirae Asset Securities, which conducted the IPO subscription, was allocated "zero shares," rendering the asset manager's promotional claims meaningless. Over the weekend, investors were unable to buy or sell the product and were left frustrated. With the stock price plunging more than 10 percent on June 15, a significant number of investors sold their holdings and declared, "I will never buy ACE ETFs again."

This is not the first time the asset manager has engaged in excessive marketing. As competition intensifies and similar types of ETFs spring up one after another, asset managers have been busy trying to differentiate their products. In this case, the link between the promotional messaging and direct investment is particularly strong, as capital flooded in right before the listing. Even within the industry, there was considerable criticism that Korea Investment Management had gone too far in its high-profile promotion of the SpaceX IPO participation.

The financial authorities have also issued repeated warnings. Seo Jaewan, Deputy Governor of the Financial Supervisory Service, recently pointed out, "There are concerns about overheated marketing in the process of brokering and advertising overseas investments to individual investors." The authorities have previously flagged cases in which advertising made SpaceX investment exposure appear as if it involved actual stock holdings, or when the weighting of SK Square was exaggerated to make SK hynix’s weighting appear higher.

Asset managers that design and launch products have a duty to properly explain risk factors. Not every member of the public invests with the foresight of a professional investor. There are also a significant number of elderly investors who, after a lifetime of saving, have taken their first step into ETFs to keep up with the times. Some even believe that all ETF products invest in representative indexes. The 57.9 billion won that had been pooled through their trust turned over the weekend into a cold sense of "brand distrust." For an asset management company handling trillions of won, this may seem like just another figure. However, it must be remembered that once investor trust is lost, it is extremely difficult to regain, even with massive marketing expenditures.

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