KCGI Asset Management triples public equity fund assets in 3 years, breaks into industry top 10

KCGI Asset Management's public equity fund net assets have nearly tripled in the three years since the firm rebranded, vaulting it into the top 10 among domestic asset managers. Improvements in long-term equity fund returns, growth in pension assets and an expansion of distribution channels pushed total net assets to more than double over the same period.

According to KCGI Asset Management, public equity fund net assets — excluding ETFs and combining domestic and overseas funds — stood at 2.16 trillion won ($1.53 billion) as of the end of last month based on Korea Financial Investment Association data, a 194% increase from three years ago. That places the firm 10th among 48 comprehensive asset management companies. Total net assets also grew 2.1-fold over the three years to 5.9 trillion won.

The growth in equity funds extended to other product categories as well. Net assets in fund-of-funds — which mainly hold overseas funds — reached 1.7 trillion won, also breaking into the industry top 10. Over the three-year period, net assets in bond funds surged 572%, mixed-bond funds 339% and fund-of-funds 247%.

Investment performance underpinned the asset growth. Eight of the nine fund categories KCGI Asset Management runs posted average three-year returns above their benchmarks. Domestic equity-mixed funds outperformed their benchmark by 24.9 percentage points, target-date funds (TDF) by 18.2 percentage points and overseas equity-mixed funds by 15.8 percentage points.

The firm's flagship equity product, KCGI Korea 1 [Equity], posted a three-year return of 170.6%, beating its benchmark by 17.0 percentage points. Its pension products — KCGI Korea Retirement Pension and KCGI Korea Pension Conversion — returned 164.6% and 165.8%, respectively, over the same period, outperforming their benchmarks by 11.0 and 12.2 percentage points.

Pension assets also expanded rapidly. Combined individual and retirement pension assets reached 2.25 trillion won, growing 3.3-fold in three years. Retirement pension fund assets in particular grew 6.6-fold. TDF net assets surpassed 1 trillion won in early last month, placing the firm eighth in the industry. The flagship KCGI Freedom Qualified TDF 2050 posted a three-year return of 59.0%, outpacing its benchmark by 25.8 percentage points.

Distribution channels and institutional mandates also expanded. The number of large distribution partners with more than 100 billion won in assets grew from eight to 10 since the rebranding, while mid-sized partners with more than 10 billion won increased from 24 to 29. Last year, the firm was selected as a discretionary manager by more than 20 institutional investors, including the national pension fund and other public pension and mutual-aid associations. This year, it formed a partnership with global asset manager Fidelity and launched a series of related funds.

KCGI Asset Management has also been steadily building out its fixed-income capabilities and product lineup. In June, it launched KCGI Korea Comprehensive Bond Fund, which invests in high-quality domestic medium- and long-term bonds. Following products focused on short-, medium- and medium-to-long-term bonds, it broadened its lineup further on Thursday with the launch of KCGI Korea Growth Leadership 50 Securities Investment Trust [Bond-Mixed], which combines growth stocks with investment-grade bonds.

"We are seeing results from the goals we set when we rebranded — managing pension assets, expanding global investment and strengthening our capabilities as a comprehensive asset manager," a company official said. "We will continue to build our strengths in new product development, including ETFs, as well as in bonds, alternative investments and the private fund segment."

KCGI Asset Management changed its name to its current form in August 2023, after KCGI became the firm's largest shareholder that same year.