The domestic exchange-traded fund (ETF) market has entered a new era, surpassing 500 trillion won, as small and mid-sized asset management firms are making significant moves to enter the ETF space. Despite Samsung Asset Management and Mirae Asset Management dominating over 70% of the market, these smaller firms are seeking new growth opportunities, particularly in active ETFs.
According to the financial investment industry on June 2, firms such as DS Asset Management, Life Asset Management, Daol Asset Management, and iM Asset Management are either planning to enter or expand their ETF operations. DS Asset Management has completed the formation of its ETF division, led by Jeong Seong-in, who previously headed the ETF business at Kiwoom Investment Management, and is preparing to launch an active ETF on the KOSDAQ in July, with plans to introduce up to three ETF products in the second half of the year.
Life Asset Management has applied for a public fund management license. Currently holding only a private equity fund license, the firm plans to explore entry into the ETF market as soon as it receives approval for public funds. Daol Asset Management is also in the process of hiring personnel with the intention of entering the ETF market. Meanwhile, iM Asset Management is reviewing the possibility of launching new products after releasing a KOSPI 200 ETF in February of last year.
Just a few years ago, skepticism surrounded the ability of small and mid-sized firms to enter the ETF market, primarily due to the significant economies of scale required for success. Currently, Samsung Asset Management and Mirae Asset Management hold a combined market share of 70% in the domestic ETF sector.
However, the growing importance of ETFs as a core business in asset management cannot be ignored. With the ETF market capitalization exceeding 500 trillion won, these funds have become a key vehicle for attracting substantial investments from individual investors.
The rise of active ETFs is particularly encouraging for smaller firms. Unlike passive ETFs that simply track indices, active ETFs rely on the investment decisions of managers, directly impacting returns. Firms with extensive experience in private equity management are well-positioned to identify specific industries or stocks and implement concentrated investment strategies, making them suitable for differentiation through active ETFs.
Profitability is also an attractive factor. While scale is crucial in the ETF market, active ETFs can command relatively higher fees based on differentiated management performance. Investors, expecting higher returns, are generally more accepting of these fees. The business model is shifting from a focus on assets under management (AUM) to one that emphasizes profitability based on management performance.
A notable example is Timefolio Asset Management. With a focus on active ETFs, Timefolio's market share jumped from 10th place at the end of 2024 to 7th place as of March this year. Its profitability has also seen significant growth, with a net income of 85.1 billion won for the 2025 fiscal year, a 145% increase from the previous year's 34.7 billion won.
Industry insiders believe that the performance of DS Asset Management will be a pivotal factor in determining the pace at which small and mid-sized firms enter the ETF market. Despite the increasing polarization in the ETF sector, the emergence of successful cases through active ETFs could lead to a surge in private equity firms entering the ETF market.
An industry official stated, "In the past, the ETF market was seen as the domain of large firms, but now there is a new option with active ETFs. As firms with private equity management experience begin to incorporate their unique investment strategies into ETFs, the competitive landscape of the market may gradually change."
* This article has been translated by AI.
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