Seoul-based Mirae Asset is looking to gain a foothold in Asia's exchange-traded funds market with the launch today of its first ETF outside South Korea and Hong Kong’s first Kospi 200-referenced ETF.
Present at the unveiling of the Tiger Kospi 200 ETF will be the new Hong Kong chief executive of Mirae Asset Global Investments (MAGI), the group’s international arm. Woong Park assumed the post this month, taking over from Peter Lee, who has moved to Seoul as managing director of MAGI’s research division.
Park was previously chief marketing officer (CMO) for MAGI, a position now held by Martyn Gilbey, who joined the firm in July in Hong Kong. In addition to his CEO role, Park also acts as international CMO for MAGI, in which capacity he oversees all marketing operations across the Asia-Pacific and EMEA regions.
Hong Kong is the main manufacturing centre for Mirae Asset’s Asia-Pacific and China funds, with $8 billion of assets under management as at the end of 2010.
The largest part of Mirae Asset’s business is retail – although wholesale, via intermediaries, rather than direct sale – but the institutional portion has been growing, particularly in Korea, Park tells AsianInvestor.
That said, MAGI will need a longer track record before it can attract mandates from many larger institutions outside Korea, he adds, but as time goes by the mandates will certainly flow.
Asked how important the ETF business will be as part of MAGI’s business, Park says the newly listed ETF will simply add to its wide range of existing actively managed products in the region.
MAGI already lists Korean won-denominated ETFs referenced to the Kospi 200 and other underlyings in Seoul, but has no current plans to list ETFs on exchanges outside Korea or Hong Kong, says Gilbey.
“We have chosen Hong Kong as the centre for our international investors wanting to access ETFs from MAGI,” he tells AsianInvestor, “as this is our regional and international HQ, and where much of our business development, portfolio management and research is conducted from.”
As for the new ETF’s potential client base, MAGI is targeting Hong Kong retail investors, and high-net-worth and institutional investors across the region, says Gilbey, who declined to comment on the AUM the firm hopes to raise.
MAGI – which launched its first ETF in 2006 and has 748 billion won ($680 million) in ETF assets under management – does not intend to challenge the leading ETF providers.
“We expect to build on this initial launch with further product launches that take advantage of both our Korean and Asia-Pacific investment knowledge and capabilities,” says Gilbey.
“We are not interested in competing head-on with the larger, established players,” he adds. “We will always seek to provide product differentiation and build on our niche strengths, hence why we have launched a Kospi 200 ETF rather than use MSCI [as the underlying index].”
The Tiger Kospi 200 ETF is a ‘replicator’, not a sampling- or synthetic-type product, says Gilbey. That is to say, Mirae physically holds all the underlying shares represented by the ETF, rather than using derivatives such as stock futures to recreate some or all of the performance.
MAGI started trading the portfolio this week with about 175 out of the potential 200 stocks, notes Gilbey. “We will always trade between 175 and 185, as there will always be some shares we can’t put in, because some have fairly onerous foreign-ownership provisions and some are just not liquid enough to allow for efficient portfolio management.”