KB Asset Management Launches Independent Management in TDF Market

Mirae Asset, KB, Kiwoom Asset Management, and Others
Surpass 50% in Independent Management Ratio

[Asia Economy Reporter Minji Lee] KB Asset Management is set to independently manage its TDF (Target Date Fund).

According to the financial investment industry on the 16th, KB Asset Management plans to proactively send customer notices within this month regarding the termination of its advisory contract with Vanguard. Following Kiwoom Asset Management's termination of its advisory contract with SSGA at the end of June, KB Asset Management also intends not to renew its advisory contract in line with Vanguard's withdrawal from the Asian market within this year.

Since launching the ‘KB On Gukmin TDF’ in July 2017 in collaboration with Vanguard, KB Asset Management has operated the fund for four years under Vanguard's advisory. Most asset management companies have operated TDFs through outsourcing or advisory contracts with foreign asset managers. Outsourced management means the overseas asset manager is the main operator, while under an advisory contract, the domestic asset manager operates the fund based on advice from the foreign asset manager.

Youngsung Kim, Executive Director of Global Operations at KB Asset Management, explained, “Even after the advisory contract ends, we have concluded discussions with Vanguard to continue using the glide path, which is a core know-how in pension management. Since we will continue to use Vanguard’s ETFs, which have low fees, as underlying investment funds, there is no operational difficulty as some have expressed concerns about.”

Recently, domestic asset managers have been restructuring their TDFs to focus on independent management. Mirae Asset Global Investments, which holds the largest market share (43.8%), has independently managed both strategic allocation and asset allocation TDFs since their launch. With Kiwoom Asset Management and KB Asset Management moving towards independent management, the scale of independently managed TDFs in the domestic market has reached 50%. Some other asset managers are also considering independent management; for example, Meritz Asset Management, which entered the TDF market last October, independently manages funds investing in global stocks and bonds.

Meanwhile, the domestic TDF market has shown explosive growth since Mirae Asset Global Investments launched the ‘Mirae Asset Asset Allocation TDF’ in 2011 under the name Lifecycle Fund, coinciding with the expansion of the pension market. According to Fund Doctor by fund rating agency Zero-in, as of the 13th, the domestic TDF market size has exceeded 6.38 trillion KRW.