Eightfold Surge from KRW 12 Trillion to 104 Trillion... The Power of Alpha Shakes Up the ETF Landscape [Active ETF Boom] ①

Active ETF Net Assets Surpass KRW 100 Trillion
Growth Outpaces Passive ETFs
Asset Managers Launch Dedicated Teams; Mid- and Small-Cap Firms Move In
Support Needed for Asset Managers’ Creative Product Design

This year, as Korea’s domestic exchange-traded fund (ETF) market continued its steep quantitative expansion—at one point surpassing KRW 500 trillion in the first half—the “active ETF” segment, where fund managers directly pursue excess returns, is emerging as a next-generation focal point. While passively managed ETFs, which simply track a designated index, still constitute the majority of the market, active ETFs have also surpassed KRW 100 trillion in net assets this year, positioning themselves as a new growth driver for the asset management industry.

Net assets skyrocket from KRW 12 trillion to KRW 104 trillion... Daily trading volume also surpasses KRW 1 trillion, signaling explosive growth

According to the Korea Exchange on September 7, Korean active ETFs have seen a rapid increase in net assets. The segment’s total net assets, which stood at only KRW 12.44 trillion at the end of 2022, rose sharply to KRW 38.65 trillion in 2023, KRW 59.42 trillion in 2024, and KRW 91.4 trillion last year. As of the end of August 2026, total net assets reached KRW 104.83 trillion, ushering in the era of KRW 100 trillion in net assets for active ETFs.

Within approximately three years and eight months since the end of 2022, active ETF net assets soared by over 740%, climbing from the KRW 12 trillion range to the KRW 104 trillion range—demonstrating steep market expansion. Passive ETFs also absorbed more than KRW 270 trillion of new funds and grew over 420% during the same period, but active ETFs far outpaced passives in terms of growth rate. The number of listed active ETF products likewise tripled, increasing from 108 at the end of 2022 to 322 at the end of August this year.

As the market has grown, trading volume has surged as well. The average daily trading volume for active ETFs jumped from KRW 120.9 billion in 2022 to KRW 582.6 billion in 2023, KRW 764.7 billion in 2024, and KRW 850.2 billion last year. As of the end of August this year, the daily average reached KRW 1.6524 trillion, surpassing the KRW 1 trillion mark for the first time.

By net asset size, KODEX Money Market Active leads among active ETFs with KRW 8.0677 trillion in assets, making it the eighth largest across all ETF products.

This remarkable growth is fueled by a shift in investor mindset amid heightened market volatility, as investors seek more than just simple index tracking. Active ETFs are products where fund managers directly select stocks and adjust allocations in pursuit of “alpha”—returns above the market benchmark. Unlike passive ETFs, which are slow to reflect the latest themes due to index revision cycles, active ETFs can quickly incorporate fast-changing market trends and new themes—such as artificial intelligence (AI), power infrastructure, or biotechnology—into their portfolios, making this agility a key advantage.

Active ETFs are gaining particular prominence in the retirement pension market, where generating alpha that outpaces inflation is essential for long-term investments. In volatile markets, managers can directly counteract the risk of index declines, while also swiftly shifting portfolios to focus on core market-leading stocks. This operational flexibility serves as a powerful draw for pension investors’ capital.

Dedicated Teams Established As More Players Enter the Fray... Asset Managers Double Down on Active ETFs

The explosive growth of the active ETF market has prompted asset management firms to quicken their pace. To overcome the plateau in traditional public offering funds and escape cutthroat fee competition in passive ETFs, firms are scrambling to secure a foothold in the burgeoning active ETF space. This has led to the establishment of dedicated organizations and the concentration of specialized talent as part of an all-out push to expand their reach.

Korea Investment Management recently transferred its active ETF management division to Korea Investment Value Asset Management. The strategy is to maximize both the efficiency of passive management and the originality required for active management by separating the two functions. Similarly, KB Asset Management reorganized its ETF division this year to create a dedicated department for managing active ETFs, and Mirae Asset Management established a Stock Active ETF Team under its Equity Management Headquarters at the end of last year.

Not only large firms but also small and mid-size asset management companies—previously focused on traditional public offering funds—are making new forays into the ETF market. Last year, THE J Asset Management made its debut in the active ETF market by listing “THE J Small and Mid Cap Focus Active”, while DS Asset Management recently entered the ETF arena with its first product, the KOSDAQ Active ETF. In addition, Life Asset Management, Taurus Asset Management, Brain Asset Management, and Daol Asset Management are reportedly actively considering launching active ETF lineups. Unlike the passive ETF market, where large capital was needed to survive endless fee wars, active ETFs allow small and mid-sized asset managers to compete on equal footing with major players thanks to unique management prowess, which is a key reason these firms are shifting their focus toward active ETFs.

Kim Jae-chil, a researcher at the Korea Capital Market Institute, commented, “Domestic active ETFs have gained a foothold in the market in just a few years. Following regulatory changes in mid-2020 that allowed active management of equity ETFs, small and mid-sized asset managers that couldn’t break into the passive market rapidly entered the scene. In contrast to the previously monopolistic passive market dominated by large firms, the active ETF market has become much more competitive.” He added, “For the active ETF market to become even more competitive and composed of creative products serving diverse investment purposes, we need more competition-oriented policies as well as more robust advisory functions from securities companies and creative product design capabilities from various asset managers.”

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