Asset Management

In recent years, as domestic financial institutions and institutional investors have sharply increased their investments in overseas funds and their dealings with foreign management companies, the asset management industry has grown steadily more globalized.

As indirect investment through funds continues to expand, the role and influence of asset management are also growing.

Against this backdrop, asset management has become a significant field, not only for maximizing investment returns but also for risk management and investor protection.

Because it is subject to strict regulation under the Financial Investment Services and Capital Markets Act and by financial authorities, it is an area that calls for transparent and systematic management.

This approach invests in company stocks to earn capital gains or dividend income.

High returns are possible, but because volatility is also high, risk management matters considerably.

This approach invests in bonds issued by governments or companies to earn interest, and it suits investors who prefer stable returns.

The risk is lower than that of stocks, though the rate of return is also more limited.

This approach invests in a suitable mix of stocks and bonds, weighing both profitability and stability at once.

The proportion of each asset is adjusted to market conditions in order to diversify risk.

This approach invests in physical real estate, such as commercial buildings, logistics centers, and hotels, to earn rental income or gains on sale.

Through vehicles such as real estate investment companies and real estate funds, retail investors can also take part.

A collective investment business entity is an institution that establishes and operates an investment trust or collective investment vehicle, and it bears responsibility for pooling investors' funds and managing assets.

A trust business entity, by contrast, safekeeps and manages the investment trust property operated by the collective investment business entity, and it acquires and disposes of investment-target assets in accordance with the instructions of the collective investment business entity.

In other words, the collective investment business entity serves as the ‘operator,’ while the trust business entity serves as the ‘custodian,’ so that their respective powers and responsibilities remain clearly distinguished.

The collective investment business entity must instruct the trust business entity on the acquisition and disposal of investment-target assets for each investment trust property in the manner prescribed by Presidential Decree, and the trust business entity manages the assets accordingly.

Where it is unavoidable for efficient management, the collective investment business entity may directly acquire or dispose of investment-target assets in its own name.

The entire asset management process must also be conducted fairly in accordance with the prescribed asset allocation statement, and the relevant books and documents must be prepared and maintained in compliance with the applicable laws and regulations.

Investors should confirm whether the asset management company thoroughly complies with the relevant laws and regulations.

If the investment limits and prohibited acts set out in the Financial Investment Services and Capital Markets Act and other laws are not observed, unexpected losses or legal problems can arise.

It helps to examine carefully whether the company's management policy and internal compliance monitoring system are sound.

Investors should check whether the management direction and investment targets presented by the asset management company are specific and easy to understand.

Because a management plan that is overly vague or lacking in detail can increase investment risk, investors should seek a full explanation of the management strategy and raise any points of doubt.

Asset management companies often recruit investors through distributors such as banks, securities firms, and insurance companies.

In this process, investors should understand how the fee structure between the management company and the distributor is organized, and bear in mind that excessive fees can weigh on the rate of return on an investment.

The management company manages assets through professional investors, yet responsibility for the final investment results rests with the investor.

For that reason, investors should fully understand the risks and potential for loss inherent in asset management, and assess carefully whether the management approach aligns with their own investment temperament and goals.

Investors have the right to request transparent disclosure of the asset management company's investment records, asset allocation statements, and management results.

It helps to review the management status on a regular basis, and to head off problems by raising questions promptly whenever something appears unclear or warrants concern.