As competition for exchange-traded funds (ETFs) in the asset management industry grows increasingly fierce, attention in the industry turned to KB Asset Management after it tapped "bond veteran" Jeong Sang-woo as head of the ETF Management Division. With a bond expert taking the baton at an ETF unit overwhelmingly weighted toward stock investing, some interpreted the move as KB Asset Management putting more emphasis on stable management than on aggressive revenue competition.
Deputy Minister Jeong began his bond management work at Samsung Fire & Marine Insurance in 2007, then joined KB Asset Management in 2011 and stayed on the bond-management track, serving as head of strategic management at the Bond Management Division, among other roles.
But KB Asset Management's choice ran counter to industry expectations. It moved to strengthen competitiveness in "active ETFs," fronted by Deputy Minister Jeong.
Since taking office, Deputy Minister Jeong has focused first on active ETFs. Whereas ETFs had long been centered on "passive" products that replicate indexes as is, he judged that the active ETF market—where managers' discretion divides revenue rates—will now be the core.
Jeong Sang-woo, head of the ETF Management Division at KB Asset Management, said in an interview with ChosunBiz on the 6th, "A 'bond mindset'—reading macroeconomic trends, managing risk, and steadily building revenue—becomes an important competitive edge even in the course of aggressive stock management," adding, "A bond mindset is the core of active ETF management."
Deputy Minister Jeong emphasized, "If ETFs in the past were stock picks aiming for short-term gains, they have now entered the realm of asset allocation, run for 10 and 20 years in retirement accounts."
Deputy Minister Jeong saw that the portfolio of active ETFs, disclosed daily, both enhances transparency and becomes the most sophisticated "customized product" for investors. For now, his performance will likely be judged through the "RISE Hyundai Motor Fixed Physical AI" ETF to be listed on the 12th.
KB Asset Management plans to launch an ETF that actively manages holdings by fixing the investment weight in Hyundai Motor at 25% and adding stocks related to "physical AI."
The reason Deputy Minister Jeong chose an ETF that concentrates investment in Hyundai Motor as the first product to debut is his outlook that a full-fledged "physical AI" era will open after software AI.
He said Hyundai Motor should not be viewed simply as an automaker. Deputy Minister Jeong said, "Hyundai Motor has unrivaled competitiveness in two areas—Autonomous Driving and Humanoid Robot," adding, "Hyundai Motor will compete with Tesla in the physical AI field."
Another core strategy unique to KB Asset Management that Deputy Minister Jeong emphasized is "pensions" and "fees." He said it was an exceptional level compared with other managers, where the maximum is around 7 basis points, that the fee for KB Asset Management's "RISE" ETF, a bond-mix product holding Samsung Electronics and SK hynix, was set at 0.01% (1 bp).
Deputy Minister Jeong explained, "Pension accounts are a long game. From new members of the workforce to investors nearing retirement, each needs asset allocation suited to them," adding, "In particular, reflecting the needs of investors who want to maximize stock weight in retirement accounts with the 30% safe-asset rule, we have launched a variety of ETFs."
Meanwhile, on the debate over whether large semiconductor stocks that have surged recently are at their peak, Deputy Minister Jeong projected, "As long as strong results continue to back them, the uptrend is likely to hold." If the early-2000s "dot-com bubble" leaned on dreams and illusions, companies like Nvidia, SK hynix, and Samsung Electronics now are laying the groundwork for rising share prices with overwhelming results.
Deputy Minister Jeong recommended to individual investors the "core-satellite" strategy, mainly used by institutional investors. For example, in the U.S. stock market, allocate 60%–80% of assets to representative indexes such as the Standard & Poor's (S&P) 500 and the Nasdaq (Core) to enjoy long-term fee benefits, and aim for excess revenue with the remainder through sector or thematic active ETFs.
He said, "The level of risk and fear of missing out (FOMO) that people can tolerate when investing in existing stocks differs by investor," adding, "To avoid being shaken by rapidly changing market conditions, I recommend setting a core such as a representative index and making appropriate portfolio adjustments from time to time."