Korea Investment Trust Management to spin off equity fund, MMF units into Korea Investment Value Asset Management
Both boards approved the split-merger Thursday; effective date set for Jan. 1 next year
Korea Investment Trust to focus on passive ETFs; Korea Investment Value to specialize in active strategies
Move mirrors Samsung Asset Management's 2017 separation of its active equity arm
Korea Investment Financial Group is restructuring the business lines of its two asset management subsidiaries. The core of the plan is to transfer Korea Investment Trust Management's equity fund and money market fund (MMF) operations to Korea Investment Value Asset Management.
As product development speed, marketing and decision-making increasingly determine competitiveness in the fast-growing ETF market, the move is seen as a strategy to sharpen each firm's edge — positioning Korea Investment Trust Management as a passive specialist and Korea Investment Value Asset Management as an active one, letting the group compete on "two wings." The reorganization echoes Samsung Asset Management's earlier decision to spin off its active equity unit into a dedicated subsidiary.
Korea Investment Trust Management and Korea Investment Value Asset Management — both grandchildren companies of Korea Investment — held separate board meetings Thursday and approved a split-merger agreement, according to the financial investment industry. Under the plan, Korea Investment Trust Management will carve out its equity fund and MMF business through a spin-off, which Korea Investment Value Asset Management will then absorb through a merger.
The two companies plan to hold extraordinary shareholder meetings on Sept. 11 to vote on the split-merger. If the process proceeds as scheduled, the effective date of the merger will be Jan. 1 next year.
The restructuring will not alter the group's ownership structure. Both Korea Investment Trust Management and Korea Investment Value Asset Management are currently wholly owned subsidiaries of Korea Investment Securities, and that status will remain unchanged after the split-merger. The reorganization reallocates business lines and personnel by function without touching the ownership structure.
Market observers expect the two firms' roles to become more clearly defined after the restructuring. Korea Investment Trust Management is expected to concentrate its capabilities on passive ETFs and accelerate efforts to strengthen its competitiveness in that segment.
Korea Investment Value Asset Management, meanwhile, is expected to shift its center of gravity toward active management by absorbing the public equity funds and MMF operations transferred from Korea Investment Trust Management. Active ETFs are also being discussed as a potential major growth pillar for Korea Investment Value Asset Management.
The move is interpreted as a strategy to sharpen each entity's mandate — rather than running multiple investment styles and teams in parallel within a single firm — in order to speed up product development and investment decision-making.
In the ETF market particularly, rival asset managers frequently launch competing products in quick succession once a similar investment theme emerges. How quickly a firm can conceive, list and win investor support for a product often determines success or failure, making organizational agility more important than ever.
For Korea Investment Value Asset Management, the restructuring marks a significant shift. The firm was established in 2006 with full funding from Korea Investment Securities and built its identity in the domestic asset management industry as a value-investing specialist from the outset.
Absorbing Korea Investment Trust Management's active management teams and products will inevitably elevate Korea Investment Value Asset Management's standing. The firm will be able to combine its existing value-investing expertise with the public fund management personnel and products transferred from Korea Investment Trust Management. Managing traditional active public funds alongside active ETFs within a single organization would also allow broad deployment of research, stock-selection and portfolio management talent.
This is not the first time a major domestic asset manager has separated its passive and active businesses into distinct legal entities to deepen specialization.
The most prominent precedent is Samsung Asset Management. In January 2017, Samsung Asset Management spun off its active management and hedge fund operations into two separate entities — Samsung Active Asset Management and Samsung Hedge Asset Management — with the stated goal of improving management expertise and efficiency.
The division of roles was clear-cut. The newly established Samsung Active Asset Management was assigned exclusive responsibility for domestic equity funds and investment advisory and discretionary services. Samsung Asset Management, the surviving entity, retained domestic and overseas index funds, ETFs, bonds and alternative investments — in effect separating "active equity management" from "index, ETF and everything else" at the corporate level.
Samsung Active Asset Management launched its own active ETF brand, KoAct, in August 2023. The subsidiary that had originally been spun off to handle traditional active fund management had, over time, developed its own independent ETF brand.
Attention now turns to the specific reallocation of personnel and products following the split-merger. Immediate questions include how many investment and support staff will move from Korea Investment Trust Management to Korea Investment Value Asset Management, how existing public fund brands will be reorganized, and under which entity and brand active ETFs will be developed going forward. Once the detailed restructuring plan is finalized, the distinct character of each firm is expected to come into sharper focus.
"As the ETF market grows and product launch cycles shorten, the speed of internal decision-making and depth of specialization inevitably become more critical," an industry official said. "This restructuring can be seen as an attempt by the two asset managers to clarify their respective strengths rather than compete in overlapping areas, and to lift the group's overall management competitiveness."
th5@heraldcorp.com
