According to investment banking industry sources on September 20, JP Morgan Asset Management notified to fund sellers that it would withdraw from retail sales business on the same day. Accordingly, the company will transfer its domestic fund management to other asset management companies.
JP Morgan Asset Management decided to shut down the business due to lower profits. The Korea Financial Investment Association said the trust money of JP Morgan Asset Management amounted to 1.18 trillion won (US$1.06 billion) as of September 18. The figure is much lower than that of other foreign asset management companies such as Fidelity Investment with 1.97 trillion won (US$1.77 billion), Schroder Investment Management with 2.33 trillion won (US$2.09 billion) and AllianceBernstein with 1.58 trillion won (US$1.42 billion).
In fact, the trust money of JP Morgan Asset Management decreased from 2.06 trillion won (US$1.85 billion) in 2014 to 1.51 trillion won (US$1.35 billion) in 2015 and to 1.29 trillion won (US$1.16 billion) at the end of last year. The company also posted 4.5 billion won (US$4.0 million) in net loss last year and 500 million won (US$450,000) as of the end of June this year.
Poor fund earnings rate was another factor. According to fund analysis firm Zeroin, the earnings rate of JP Morgan Russia Fund Class A after set-up is -63.47 percent, JP Morgan Natural Resources -46.79 percent, JP Morgan Central and South America -28.91 percent, JP Morgan China -17.08 percent and JP Morgan Brazil -16.51 percent.
JP Morgan Asset Management will not set up or raise new funds in South Korea but will continue its other businesses for institutional investors including investment consulting and market research.