South Korean investment firms’ assets under management (AUM or operating assets) have set a new milestone by exceeding one quadrillion won (US$890.08 billion) for the first time. Their net profits increased more than 20 percent as the operating assets grew.
According to the Financial Supervisory Service (FSS) on Sept. 5, the assets under South Korean investment companies’ management reached 1.01 quadrillion won (US$898.98 billion) as of the end of June this year after adding 29 trillion won (US$25.81 billion), or 3 percent, during the second quarter. This is the first time that the total AUM of the country’s asset management companies breached the one quadriillion mark.
Both assets held for investment in funds and those under comprehensive investment management service accounts showed a growth. The assets held for investment in funds amounted to 541 trillion won (US$481.53 billion), up 3.6 percent from 522 trillion won (US$464.62 billion) at the end of March, while those under comprehensive investment management service accounts rose 2.2 percent to 469 trillion won (US$417.45 billion).
The assets held for public offering funds gained 1.7 percent to 232 trillion won (US$206.5 billion). Investments in bonds and money market funds (MMFs) led the increase in the assets. The assets held for bonds and MMFs increased 800 billion won (US$801.07 million) and 3.8 trillion won (US$3.38 billion), respectively, over the same period.
The assets held for private equity funds rose 5.1 percent to 309 trillion won (US$275.03 billion), based on bonds, real estates and special assets. The assets under comprehensive investment management service accounts of institutional investors, insurance companies and pension funds, grew 8.2 trillion won (US$7.3 billion).
The profitability index also remained healthy. The combined net profit of the nation’s asset managers came to 216.2 billion won (US$192.43 million) in the second quarter, up 26.7 percent, or 45.5 billion won (US$40.5 million), from the previous three-month period. Commission income rose 8.4 percent as the AUM grew. Accordingly, the total operating profit gained 16.8 percent from the previous quarter.
However, only 137 out of total 228 asset managers operating in South Korea were able to make profits of 244.2 billion won (US$217.36 million), while 91 logged losses of 28 billion won (US$24.92 million) in the second quarter.
Private equity fund managers, particularly, performed poorly with 81 out of all 154, or 52.6 percent, running into red figures.
An official from the FSS said, “With a growing number of new asset managers, the competition is getting more intensified. The profitability index seems fine in general but private equity fund managers are especially operating at a loss.”
The overall return on equity (ROE) reached 15 percent in the second quarter, up 2.9 percentage points from the previous quarter.