Korean Funds Go Overseas

Korea’s Mirae Asset Financial Group will begin selling its own fund products to foreign investors in the first half of this year, at the earliest. Its first target will be Hong Kong. Now Korean public offering funds are finally set to advance to the overseas market. It is the first time for a Korean asset management firm to sell its own investment vehicles out of Korea.

A source from the asset management firm said yesterday, “We’re waiting for the final approval of the Luxemburg government in order to set up off-shore funds.” He added, “After finishing fine-tuning with the Financial Supervisory Service about the establishment of an overseas firm, we’ll begin selling funds in Hong Kong in May or June, at the earliest.”

If the firm successfully begins its overseas operation, Korean firms can secure a channel through which they can attract foreign capital without difficulties. Also, the firm’s successful launch of overseas business will give Korea a chance to show off its financial prowess in the global market. Asset management firms from the United States and Europe sell their own funds in the global market.

○ Approval Process Almost Finished

In his new year’s greetings to employees, Park Hyun-joo, chairman of the asset management group, said, “This year will be the first year of Mirae Asset Investments building its operation network in the U.S. and Europe and sell its funds overseas.”

Mirae Asset Investments, the asset management flagship, have taken steps to sell off-shore funds in Luxemburg since last year. Luxemburg has signed agreements with 20 nations to allow cross-selling of funds. For the reason, even the world’s most well-known asset management firms set up their funds in Luxemburg before selling their products in the global market.

Mirae Asset will export ‘umbrella funds’ consisting of several distinct sub-funds. Its umbrella funds will have nine sub-funds including a stock fund, a regional fund which invests in specific regions (e.g. China fund, India fund, Asia-Pacific fund), and a sector fund that invests entirely or predominantly in single sectors (e.g. raw material fund, IT fund).

Mirae Asset Investments’ branches in Korea, Singapore and Hong Kong will manage the fund.

○ Operation Network in Asia, Europe and the U.S.

Mirae Asset has been in contact with Citi Bank, HSBC and other local banks in Hong Kong to establish a sales network, in order to begin selling funds there immediately after receiving the final approval from the Luxemburg government. It will expand its sales network into the U.S. and Europe after launching its funds in Asian countries such as Singapore or Taiwan.

At the same time, the asset management firm has sent its experts to the U.S. to take necessary steps. Since Americans usually buy funds via financial advisers, the firm is trying to sign partnership agreements with major banks that have lots of financial advisers.

A senior executive of a foreign asset management firm said, “Mirae Asset’s funds are highly likely to sell well in Asian countries including Hong Kong, Singapore and Taiwan. However, it needs to take a different approach for the U.S. market.”

crystal@donga.com