Rapid Growth and Intensified Duopoly in the Korean ETF Market

The Korean exchange-traded fund (ETF) market has seen unprecedented growth, reaching a total size of 375.9 trillion KRW. For the first time, the top five asset management firms have surpassed 300 trillion KRW in assets under management, with the market expanding more than tenfold over the past decade. Within this surge, Samsung Asset Management and Mirae Asset Global Investments now collectively control 71.1% of the market, cementing a strong duopoly. Samsung leads the pack with a 39.33% share (141.9 trillion KRW), outpacing Mirae at 31.95% (115.2 trillion KRW), a trend further boosted by a rally in the Kospi index. Despite this expansion, asset managers are facing profitability challenges due to fierce fee competition, which has led to a steady decrease in management fees. Concerns from financial regulators regarding the sustainability of this low-fee battle have prompted calls for greater product differentiation to maintain competitiveness. With capital and product offerings concentrated among the top managers, market consolidation has become more evident, potentially undermining long-term diversity and competitiveness. Additionally, external factors such as tensions between Iran and the US have shown the market's vulnerability, with notable impacts on leading firms like Samsung.

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