Mirae Asset Global Investments has created a new ETF Strategy Division that brings together product development, index design and negotiations with outside institutions, in a push to strengthen the competitiveness of its exchange-traded fund lineup. With competition among asset managers intensifying, the firm is building a decision-making structure that spans everything from product planning to coordination with related institutions.
Mirae Asset Global Investments carried out the reorganization at the end of June, placing the new division under Kim Nam-ki, head of the ETF management unit, according to financial investment industry sources on the 28th. The division is responsible for identifying and developing new product ideas, designing ETF concepts and investment strategies, and reviewing and designing underlying index methodologies. It launched as a small team of three to four people, staffed initially by reassigning existing ETF management personnel, and recently began hiring experienced professionals to add more staff.
The new division will also handle communication with related institutions. Bringing an ETF to market requires discussions with the Korea Exchange on listing requirements and with index providers on the composition and methodology of underlying indexes. Adding a communication function to a unit that handles product development and index methodology design effectively strengthens the firm's capacity for dealing with regulators and other outside bodies. The setup is seen as an attempt to link related tasks within a single organization and reduce communication bottlenecks that can arise during product launches.
With even small and mid-sized asset managers joining the race for new products this year, and product lines growing more specialized, close collaboration with external stakeholders is becoming more important. Unlike ETFs tracking benchmark indexes, thematic and strategy-based ETFs depend less on a manager's brand and more on its ability to quickly identify investment demand and translate it into a differentiated structure, industry watchers say. The scope of collaboration is also widening, covering constituent stocks, weightings and rebalancing conditions as index methodologies are designed or revised to fit product concepts.
Mirae Asset Global Investments changed course in June through talks with an index provider over adding SpaceX to its TIGER U.S. Space Tech ETF. The firm had initially announced it would add the stock on the first day of listing, but after concerns emerged about supply-demand pressure and potential market shock in the early days of trading, the two sides agreed not to change the ad hoc rebalancing schedule. Mirae Asset Global Investments then shifted to adding the stock two trading days after listing (T+2) in line with the existing methodology, causing some confusion among investors.
The firm also realigned its product development and client-facing marketing functions. Choi Chang-kyu, an executive recruited from Samsung Asset Management in May last year to head the ETF research division, was moved in this reorganization to head the ETF consulting division under the marketing organization. Choi will continue existing external activities such as market analysis and investor education and content, while matters related to new products go to the newly created division, drawing a clearer organizational line between product strategy and marketing.
An official at another asset management firm said, "In an industry with heavy turnover, personnel and teams that understand products while dealing with both sales channels and investors are still scarce." The official added, "This reorganization looks like a move to raise the expertise of each unit while realigning the roles and links between functions."
