In the first half of this year, buoyed by the popularity of domestic defense stocks and high dividend stocks, Hanwha Asset Management's market share has increased in the exchange-traded fund (ETF) market, but its performance has deteriorated. This is interpreted as a reflection of the fact that management companies are setting ETF management fees low in a fiercely competitive ETF market.
According to sales reports and others on the 26th, Hanwha Asset Management posted a net profit of 20.3597 billion won in the first half of this year, which is a 40% decrease compared to the same period last year (34.262 billion won). Operating profit also slightly decreased to 28.1686 billion won. Hanwha Asset Management was the only major asset management company to see a decline in operating profit.
Excluding Hanwha Asset Management, major asset management companies generally showed robust performance in the first half of this year. Each firm's net profit increased compared to the same period last year: ▲ Kiwoom Asset Management 131.8%, ▲ KB Asset Management 129.5%, ▲ Mirae Asset Global Investments 32.2%, and ▲ Samsung Asset Management 22.4%.
Considering that Hanwha Asset Management achieved standout results in the ETF market in the first half of this year, its performance was significantly sluggish. A representative from Hanwha Asset Management noted, "A one-time profit occurred from the sale of real estate funds last year, creating a base effect."
The "killer ETF product" launched by Hanwha Asset Management has performed remarkably as the domestic stock market shows vigor. The representative products are the "PLUS K Defense ETF," which invests in domestic defense stocks, and the high-dividend stock ETF, the "PLUS High-Dividend ETF." Both ETFs exceeded 1 trillion won in net worth (AUM), claiming the number one position in AUM in the defense and high-dividend institutional sectors, surpassing similar ETFs from large asset management firms.
The PLUS K Defense ETF, which focuses intensively on Hanwha group defense stocks like Hanwha Aerospace and Hanwha Ocean, garnered significant attention this year as the shipbuilding, defense, and nuclear power sectors surged in the domestic stock market. The PLUS High-Dividend ETF also attracted funds amid expectations that the new government would promote dividends for listed companies.
As a result, Hanwha Asset Management's market share in the ETF market has also improved. Hanwha Asset Management's share increased from 1.95% at the beginning of this year to 2.83% recently. The scale of ETF assets, which was 3.3596 trillion won at the beginning of the year, increased to 6.4181 trillion won as of the 21st.
However, it appears that growth in the ETF market has not translated into performance. As competition over fees intensifies in the ETF market, it has not significantly benefited in terms of profit. The total expense ratio for the PLUS High-Dividend ETF is 0.23%, while the total expense ratio for the PLUS K Defense ETF is 0.45%, which is similar to or slightly lower than competitors' ETFs.
A representative from the asset management industry said, "Currently, ETFs have low fees and management costs, so even if sold in large quantities, they do not have a meaningful impact on operating profit," adding, "How the asset management industry will manage ETFs in the future is a task to consider."