Early Stage of Capital Market Phase Change
Higher Volatility Requires Diversified Investment
Confident in Growing into a Company with 10 Million Customers in 10 Years
Through User Feedback and Superior Technological Competitiveness
[Asia Economy Reporter Minji Lee] "If you build a soccer team only with skilled forwards, you might win easily once, but if the goal is to win the championship, it is important to win multiple games through a ‘strategy’ that appropriately balances the ratio of defenders and forwards."
Jihye Lee, CEO of Aim, a fintech personal asset management company, compared investment strategy to soccer. As inflation fears are reflected in the market ahead of entering a recovery phase, causing increased volatility in global stock markets, what stock market participants need most now is ‘diversification.’
CEO Lee said, "Due to the nature of capital markets, at the beginning of a phase change, opinions sharply diverge into ‘rising vs falling,’ inevitably increasing volatility. Momentum-based investing focused on high-growth stocks aligned with trends has driven returns, but now is a time when trends change rapidly, so continuing such investment methods is risky." She explained that while following the flow might have been appropriate during last year’s low-volatility, long-term bull market after the COVID-19 outbreak, the risk is higher now.
Lee emphasized that since it is difficult to identify periods when stocks, bonds, and alternative assets perform efficiently or not, at least minimal asset allocation is essential. She also noted that even global institutional investors find it challenging to understand each asset’s characteristics and generate returns, which is why they use diversification strategies. She advised, "Global hedge funds also use leverage up to 70 times their principal, but even in such strategies, they allocate only 5-10% of total assets and diversify the rest into assets that can reduce volatility. It is risky to put everything into stocks when the slope of returns is flattening."
In an environment where asset growth is difficult with labor income alone, the importance of diversification inevitably increases. Lee explained, "If your investable income source is concentrated in labor income, you need to reduce trial and error through diversification. If you cannot find your own principles, it is reasonable to choose what suits you through advisory firms."
In fact, the number of prospective investors seeking AI algorithm-based personal asset management is increasing every year. Aim’s cumulative membership grew about 110%, from 300,000 in 2019 to 630,000 last year.
Aim’s competitiveness lies in ‘constant communication with investors’ and the ‘technological competitiveness’ reflecting this. CEO Lee said, "From the early days of the startup, we held monthly meetings with users to minimize financial information asymmetry for customers. It also helped us learn what kind of support is needed from the public’s perspective, greatly aiding the development of services for users."
Now in its sixth year since founding, CEO Lee likened the current situation to "sitting in the locker room after the first half." While the first half was spent making investors and the market understand Aim’s services, the second half will focus on strengthening the team and reorganizing to promote the service further and build stamina. Lee said, "I hope that by the 10th anniversary, we become a company that can help the lives of 10 million people. Through continuous self-innovation, we will become a company that shares top 1% asset management services with more people beyond national borders."
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