[Market's Eye] "Growing ETFs, AI is the Trend... Will Become People's Investment Technology"

Interview with Lee Kyung-jun, Head of Strategic ETF Management at Mirae Asset Global Investments
"Mirae Asset Management, Strengths in Global Network and Challenging Culture"

"This year, the trends in Exchange-Traded Funds (ETFs) are expected to be artificial intelligence (AI), monthly dividends, and interest rate cuts."

Lee Kyung-jun, Head of Strategic ETF Management at Mirae Asset Global Investments. Photo by Mirae Asset Global Investments

Lee Kyung-jun, Head of Strategic ETF Management at Mirae Asset Global Investments, said in an interview with Asia Economy on the 19th that this is his forecast for ETF trends this year. Lee is an expert who has worked in ETF operations for over 15 years, starting in 2007 at Samsung Asset Management's ETF department. He joined Mirae Asset Global Investments in August last year.

He anticipated that interest in AI will continue this year, leading to growth in related ETFs. In this process, he expects a search for companies comparable to AI leader Nvidia to emerge. Mirae Asset Global Investments has launched ETFs such as the 'TIGER U.S. Philadelphia Semiconductor Nasdaq' ETF. Lee explained, "Nvidia holds a monopolistic position in the AI market," adding, "There will be a process of finding new stocks as challengers attempt to penetrate Nvidia's market and build a new AI ecosystem."

Alongside this, he predicted that interest in monthly dividend ETFs will also increase. Monthly dividend ETFs are products that pay out distributions every month based on cash flows from underlying assets such as stocks or bonds. He emphasized, "Monthly dividend ETFs will become essential for retirement preparation," and added, "They will serve as a means to alleviate anxieties such as the depletion of the national pension, which retirees inevitably worry about due to Korea's demographic structure."

Recently, Mirae Asset Global Investments launched the TIGER 1-Year Bank Negotiable Certificate of Deposit (NCD) Active (Synthetic) ETF. This ETF calculates the 1-year NCD interest rate on a daily basis and applies it with compound interest. Investors can earn the daily interest rate of the 1-year NCD even with just a one-day investment, without any fixed period or conditions.

He said, "This product can be a new alternative for conservative investors who prefer deposit products," and explained, "In the case of deposits, taxes are paid each time interest is paid, but with this product, taxes are deferred until sale, which can benefit investors sensitive to comprehensive income tax." He added, "Experiencing the CD ETF may also serve as a stepping stone for investors to diversify into various other types of products."

Mirae Asset Global Investments maintained a leading position last year with a 37.2% market share in the domestic ETF market. He attributed this success to 'innovative growth' and 'pension growth.' He explained, "When we consider products, the two main focuses are innovative growth and pension growth," adding, "Innovative growth refers to identifying companies driving growth, while pension growth relates to whether the products help investors in their retirement." He emphasized, "We are always thinking about discovering products that fit the customer's profile."

He also cited the globally connected network as a strength. Mirae Asset Global Investments began with Canada's 'Horizon ETFs' in 2011, followed by acquisitions of U.S. 'Global X' in 2018 and Australia's 'ETF Securities' in 2022. It currently operates in 16 regions worldwide, including the U.S., Canada, and Hong Kong. He said, "We gain tremendous synergy by obtaining diverse ideas and know-how through various regions," and added, "Our greatest strength is the spirit of challenge that is not afraid to create something new."

ETF Market Continues to Grow... Regulatory Relaxation Needed

He predicted that the ETF market will continue to expand, citing that there are no other products as transparent and diversified as ETFs. Lee said, "Although it is a clich?, ETFs are the greatest innovation among financial products introduced in the 21st century," explaining, "Because all investment information is disclosed daily and ETFs are listed, buying and selling are convenient." He added, "They will grow into a national financial technology tool like overseas."

However, he advised investors to check costs when investing in ETFs. He said, "It is better to avoid products with excessively high costs due to structural reasons," and advised, "Since these details can be checked through disclosures by the Korea Financial Investment Association, please review them carefully before investing."

He also stressed the need to relax domestic ETF regulations, especially regarding leveraged ETFs. For domestic leveraged ETFs, investors must have a minimum deposit of 10 million KRW and complete prior online education by the Korea Financial Investment Association. He said, "Many people are trading leveraged ETFs in the U.S. market at night," adding, "To attract these investors domestically, related regulations need to be relaxed."

He continued, "From the perspective of giving young people opportunities to accumulate assets, leverage up to 2x should not pose significant problems," emphasizing, "Since domestic leveraged ETFs provide abundant investment information and have various positive functions, regulations should be eased."

Finally, Lee said his goal is to create products that can support his own retirement. He explained, "Personally, I dream of a comfortable retirement and am especially thinking about ways to live without working," adding, "My goal is to launch products that can provide answers to this."