Shinhan US Index Fund Series Surpasses 400 Billion KRW in Assets Under Management

Shinhan Asset Management announced on January 8 that the combined assets under management of its two 'Shinhan US Index Fund' products have surpassed 400 billion KRW.

The Shinhan US Index Fund series represents Shinhan Asset Management's flagship US index fund offerings, consisting of two products: the 'Shinhan US S&P500 Index Fund' and the 'Shinhan US Nasdaq100 Index Fund,' both of which track major US stock indices.

To broaden investment choices, the funds are designed to offer both hedged (H) and unhedged (UH) options, allowing investors to select based on their investment preferences and currency outlook.

The funds have also demonstrated outstanding results in terms of capital inflows. According to KG Zeroin, total capital inflows into North American equity funds in the overseas equity category last year amounted to 255.5 billion KRW. Of this, Shinhan Asset Management's US Index Funds recorded a net inflow of 211.5 billion KRW, ranking first among asset management companies.

The strong capital inflows are attributed to the funds' combination of excellent performance and competitive fee structures. The Shinhan US S&P500 Index Fund (UH) delivered a one-year return of 14.63%, while the Shinhan US Nasdaq100 Index Fund (UH) achieved 17.15%. The total expense ratios stand at 0.295% and 0.30%, respectively.

Notably, the Shinhan US Index Funds outperformed domestic exchange-traded funds (ETFs) that track the same indices. During the same period, the average returns for major S&P500 ETFs and Nasdaq100 ETFs were 13.93% and 16.55%, respectively. The average expense ratios for these major ETFs were 0.028% and 0.015%, which are lower than those of the index funds.

Despite having a slightly higher headline expense ratio compared to ETFs, the Shinhan US Index Funds achieved higher annual returns than leading domestic S&P500 and Nasdaq100 ETFs. This is attributed to sophisticated management that minimizes tracking error, an efficient operational structure, and the cumulative effect of cost differences incurred during trading, all of which contribute to the difference in actual returns.

Kim Gideok, Head of Quant & ETF Management at Shinhan Asset Management, explained, "The key to the performance difference lies in efficient index-tracking management and minimizing costs incurred during the investment process, such as transaction fees paid to liquidity providers (LPs)."

He added, "Even if ETFs have lower stated total expense ratios, in practice, additional costs such as brokerage commissions and spread costs arising from bid-ask differences can occur during trading. Over the long term, this can lead to differences in actual returns."

Kim emphasized, "It is important to note that even when tracking the same index, differences in investment structure can lead to differences in performance."

Another competitive advantage of index funds is that they can be held long-term without separate transaction costs, making them suitable for pension accounts and long-term installment investments. Kim commented, "Since its launch in 2023, the Shinhan US Index Fund has continued to grow in the pension market based on its product competitiveness. The ability to invest long-term without additional transaction costs has received positive feedback from pension account holders and long-term installment investors."