"AI, I Only Trust You" Ants' 'Seultusaeng'

KOSPI Volatility Continues
Surge in AI Investment Advisory and Discretionary Services

Pint Reports 81.4 Billion KRW in Q3 Investment Assets
Quarterback Sees 263% Increase Compared to Last Year's First Half

Quick Rebalancing Upon Risk Signal Detection
Boasts Annual Returns of 6-8%

[Asia Economy Reporter Minji Lee] Investors entrusting their assets to AI robo-advisor (RA) investment specialist firms are increasing. It is analyzed that investors who jumped into direct investment during last year's stock market boom have started managing returns with diversified portfolios through AI as KOSPI volatility increased this year.

According to the Korea Financial Investment Association on the 20th, as of the end of August, the amount of investment advisory and discretionary contracts was 654.5029 trillion KRW. Compared to 618.2564 trillion KRW in March this year, five months earlier, it increased by about 5.8%. Investment advisory services, which only provide investment advice to investors, increased by 3.3% to 57.843 trillion KRW during the same period, while discretionary investment, which manages all or part of the client's assets, increased by 6.1% to 596.66 trillion KRW.

The increase in KOSPI volatility significantly influenced investors to entrust money to AI investment advisory and discretionary service providers to receive personalized asset management services. Recently, AI investment has gained attention because it allows diversified investment in various assets such as stocks, bonds, gold, and commodities according to one's investment style. For example, if an investor wants to save marriage funds through discretionary investment, AI manages a customized portfolio so that the desired amount can be accumulated by the target period.

December Asset Management, which operates the AI investment platform 'Fint,' recorded an all-time high with 81.4 billion KRW in assets under management (AUM) in the third quarter. Fint's AUM increased by 27 billion KRW in the third quarter alone, greatly surpassing the asset growth of 26.3 billion KRW in the first half. Fint only provides discretionary investment services to individual clients, and the number of accounts also increased significantly from about 4,000 in the first half to 10,000 in the third quarter, a 150% increase.

Quarterback Asset Management saw a sharp increase in investment advisory-related funds in the third quarter, rising about 197% from 69.8 billion KRW in the first half of the previous year to 208 billion KRW. Advisory-related amounts surged from 50.3 billion KRW to 162 billion KRW, and discretionary-related amounts increased from 35.9 billion KRW to about 46 billion KRW. This reflects not only the expansion of advisory scale by financial institutions but also a significant increase in funds in wrap accounts (Korea Investment & Securities) and public funds (Kiwoom Investment & IBK Asset Management) advisory services.

Although Fount Investment Advisory's third-quarter results have not yet been compiled, the asset growth trend is expected to continue. As of the second quarter, AUM from investment advisory and discretionary services reached 870 billion KRW, a 470% increase compared to the first half of last year. The inflow of funds centered on individual and institutional clients since the second half of last year positively impacted asset growth. A company official explained, "We have advisory contracts with securities firms and asset managers, so the advisory sector's growth rate was high, and financial companies increasingly entrusted proprietary assets. The discretionary sector, which can expand returns by bypassing customer judgment processes, is a service that AI investment can perform best, and the numbers are meaningfully increasing."

By diversifying investments across various assets and quickly rebalancing whenever risk signals appear, these portfolios have been stably managed with annual returns of about 6-8%. In the case of Fount, which has the largest asset size, returns are estimated at 5% for a one-year investment period, 12% for two years, and 24% for over three years.

Meanwhile, the fee structure of AI investment specialist firms is higher than that of general public funds. In funds, fees are set at the minimum level with little difference among asset managers, but AI firms have different fee structures. Fint charges no upfront fees and imposes a 9.5% performance fee on profits. If there are no profits, no fees are charged. Fount Investment Advisory also charges a 15% fee only on profits. Quarterback Asset Management has significantly lowered fee barriers to expand individual client inflow. For thematic products, only 5% of performance is charged as a fee, and for some customized bond portfolios, a zero-fee policy allows operation without fees.