Timefolio Asset Management, a small and midsize asset management firm specializing in active management, rose to No. 8 in exchange-traded fund (ETF) market share. That was thanks to the popularity of active ETFs, in which portfolio managers actively adjust holdings and their weights. Still, Timefolio Asset Management's market share remains in the 1% range, leaving a large gap with top-tier asset managers.
According to the Korea Financial Investment Association statistics system on the 30th, as of the previous day, the net worth of Timefolio Asset Management's 16 ETFs totaled 2.6743 trillion won. As net worth swelled by more than 1.74 trillion won from 930 billion won at the start of the year, it climbed two spots from 10th place, overtaking NH-Amundi Asset Management and Hana Asset Management.
In particular, Timefolio Asset Management's average net worth per ETF is 167.1 billion won, ranking fourth after Samsung Asset Management, Mirae Asset Global Investments, and Korea Investment Management. It means Timefolio Asset Management performed well with a relatively small number of ETFs.
However, Timefolio's ETF market share is only 1.1%. The gap is about double compared with Hanwha Asset Management in sixth place (2.7%) and Kiwoom Asset Management in seventh (2%). That contrasts with the tight margins of around 0.1 percentage point with NH-Amundi Asset Management and Hana Asset Management.
Given the nature of active ETFs, expanding Timefolio Asset Management's market share is not easy. For one, the number of ETFs a portfolio manager can handle is inevitably smaller than for passive ETFs that track a benchmark index. That means it cannot increase the number of products quickly.
Also, because it has focused on launching ETFs that use stocks as the underlying asset, there are gaps in bond and derivatives ETFs, which account for half of the ETF market. A financial investment industry official said, "Demand for bond ETFs is steady, and money market fund ETFs and rate-focused ETFs that are used like parking (on-demand) accounts are also big, but these are areas that are hard for active asset managers to enter."
It is also not easy for active ETFs to achieve excess returns over the benchmark (benchmark, performance evaluation index). KB Asset Management's "RISE KOSPI," Mirae Asset Global Investments' "TIGER KOSPI," Korea Investment Management's "ACE KOSPI," Hanwha Asset Management's "PLUS KOSPI," and Samsung Asset Management's "KODEX KOSPI" ETFs posted returns of 42.34% to 42.96% from the start of the year through the 29th. But Timefolio's "TIMEFOLIO KOSPI Active" recorded a 41.38% return over the same period, trailing passive ETFs.
The fact that active ETFs charge higher management fees than passive ETFs is another hurdle that makes investors hesitate. Timefolio Asset Management's average total expense ratio (TER) is 0.9% per year, 0.5 percentage point higher than the overall ETF average of 0.4%.
Some say time is needed for the long-term performance of active ETFs to accumulate. Kim Jae-chil, senior research fellow at the Korea Capital Market Institute, said, "The short-term performance of domestic active equity ETFs is not bad, but because their operating history is short, confidence in their long-term performance likely has not yet been established."