[Market Insight] "Avoid Indiscriminate ETF Launches... It Will Help Grow Customer Assets"

Interview with Choi Young-jin, Head of Strategic Business Division at Hanwha Asset Management
"Product launch is not the end... Communication with customers is important"

"Hanwha Asset Management's basic strategy is not just to launch products and end there, but to communicate in a way that helps customers grow their healthy assets."

Choi Young-jin, Head of Strategic Business Division at Hanwha Asset Management. Photo by Hanwha Asset Management

Choi Young-jin, Head of the Strategic Business Division at Hanwha Asset Management, said this in a recent interview with Asia Economy held at the 63 Building in Yeouido.

Hanwha Asset Management is taking a different path from competing firms in the Exchange-Traded Fund (ETF) market. While other companies have launched various ETFs, Hanwha Asset Management has not introduced any new products from September last year until this month. Regarding the reason, Head Choi explained that indiscriminate product launches do not benefit customers. He said, "There were many products we could have launched, but we deliberately did not," adding, "We judged that it is more important to understand investors' needs and contribute to long-term asset growth rather than launching products indiscriminately."

Nevertheless, Hanwha Asset Management's ETF net asset value is increasing. As of the end of last month, the total net assets of ETFs stood at 3.1392 trillion KRW, nearly 500 billion KRW more than at the end of September last year. In particular, among the representative ETFs, the net asset values of Arirang (ARIRANG) K Defense Fn, High Dividend Stocks, and Japan Semiconductor Materials Solactive were 71 billion KRW, 300.1 billion KRW, and 26.5 billion KRW as of the 5th of this month. These represent increases of 18.40%, 45.55%, and 98.76%, respectively, compared to the end of last year.

Rather than simply launching products, the key was promoting existing products more to customers. It was about strengthening communication. He explained, "It is more important to tell the story behind the product rather than just launching it and ending there," adding, "When customers understand the background of why the product was created and the reasons it is bound to grow, demand naturally follows."

He emphasized that communication is essential for the company's growth. "For an asset management company to grow in scale, the assets under management must increase, and for that to happen, customers' assets must also grow," he said. "We need to accurately explain the characteristics of each product so that customers can trust us."

Hanwha Asset Management is also strengthening communication between departments. In September 2023, the company reorganized its structure by establishing divisions and restructuring headquarters. The Strategic Business Division now includes departments for ETFs, pensions, digital marketing, and new businesses. He emphasized, "Previously, departments operated separately, but now they work organically together to create synergy," adding, "By generating synergy among each other, we can increase valuation."

Hanwha Asset Management plans to launch products that meet investors' needs. He said, "We are preparing products like bonds and parking-type funds that can be invested in instead of fixed deposits and can be included in retirement pension assets," adding, "In the future, instead of launching products indiscriminately like before, we plan to release products aligned with the three elements of future, technology, and sustainability." He added, "We will study customer experience and data to develop products accordingly."

He also viewed Bitcoin spot ETFs positively. "We have been continuously interested in this area, having produced related reports and broadcasts since 2020," he said. "If regulations on spot ETFs are eased, we will actively consider them."

Head Choi forecasted that the ETF market will continue to grow but also expects a selection process to occur. "There are now over 800 ETFs listed domestically, which covers most of the possible types," he said. "Competitive products will survive with stable demand and steady returns."

Given the large number of ETFs listed, he advised investors to avoid frequent trading. "Frequent trading chasing trends should be avoided," he explained, "because frequent trading can lead to higher commission costs." He added, "ETFs are products with great merit when invested in for the long term."

Finally, he emphasized his commitment to realizing the value of Hanwha Group's financial brand, 'LifePlus.' Head Choi expressed his aspiration, saying, "I want to create a company that grows together with customers and builds wealth together, not just chasing short-term profits."