Stock Market Boom Boosts Asset Manager Profits, But Polarization Deepens

While the booming stock market has continued to drive growth in the performance of asset management companies, polarization within the industry has deepened. Due to market concentration and the risks associated with leveraged investments, the number of asset management firms reporting losses has actually increased.

According to the Financial Supervisory Service (FSS) on September 11, the net income of asset management companies in the second quarter of this year provisionally totaled 2.6889 trillion won, up 83.4% from the previous quarter. Operating profit for the same period also rose 78.9% to 2.4195 trillion won.

The robust stock market led to a significant increase in fee income, greatly boosting operating performance. In the second quarter of this year, fee income reached 2.6072 trillion won, up 37.7% from the previous quarter. Of this amount, fees related to funds accounted for the majority at 2.0326 trillion won. Fee income related to discretionary advisory services stood at 574.6 billion won.

Total assets under management (AUM)—the combined figure for funds’ net assets and discretionary investment evaluations at all asset managers—reached 2,777.5 trillion won, a 17.9% rise from the previous quarter.

The size of funds’ net assets stood at 1,730.9 trillion won. Of this, public funds amounted to 897.4 trillion won, representing a 27.2% increase from the previous quarter, driven by the rise in the KOSPI index and the expansion of the exchange-traded fund (ETF) market. Private funds reached 833.5 trillion won, up only 6.2% over the same period. Discretionary investment evaluations totaled 1,046.6 trillion won, up 20.9% from the previous quarter.

The proportion of loss-making asset management companies has actually increased. Out of a total of 513 asset management companies, the proportion of firms in the red rose from 37.6% in the first quarter of this year to 42.9% in the second quarter. During the same period, the proportion of loss-making public asset managers (77 companies) declined from 15.6% to 14.3%, while the rate among private asset managers (436 companies) increased from 41.5% to 47.9%.

A representative from the FSS explained, "Although the market index gains led to strong quarterly profits, risks have emerged due to the concentration of investment funds in specific sectors and stocks, as well as excessive short-term trading and leveraged investment related to ETFs."

The FSS plans to strengthen its monitoring of vulnerable asset management firms and will continue efforts to curb leveraged investment and ease market volatility.

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