General equity funds think differently to thrive

In the first half of 2015, general equity funds struggled with an average profit rate of 12.11 percent. This was far below the small and midsize cap funds’ 25.89 percent and the Chinese funds’ 19.34 percent. But not all suffered. The top five general equity funds enjoyed higher returns than some of the small and medium cap funds.

The funds that did well in the first half had one thing in common: They trimmed the numbers of funds they were managing, which increased their focus, and invested in companies and shares that were different.

The No.1 spot was taken by Lazard Asset Management. Lazard has a long history with Meritz Asset Management, which ranked fifth on the list. John Lee, the CEO of Meritz, used to work at Lazard while senior management director Kwon O-jin also worked at Lazard before moving to his current job at Meritz in 2013.

Until 2013, Meritz was not an asset management company that had high profit return rates. In the JoongAng Ilbo’s past evaluations of fund managers, Meritz was at the bottom of the list most of the time.

Things changed after current CEO Lee joined the company in 2013.

“One can make different investments when you think differently,” Lee said. “There are no reasons to own several funds that are managed in the same way.”

Trimming down the funds the company manages helped Meritz improve its return rates. The company now ranks second by size of assets amongst asset management companies, by returns with 31.25 percent in the first half.

As word-of-mouth spread of Meritz’s achievements, investors flocked to subscribe for the funds. In the first half, Meritz Asset Management was able to attract 812.1 billion won ($719 million) of investments, which is the largest amount amongst asset management companies. It is also much larger than the 206.4 billion won that runner-up Hyundai Investment collected.

Meritz’s small cap fund that launched last month succeeded in attracting 261.3 billion won in investment in the first six months.

While most of the value stock funds suffered, two Mirae Asset Value Stock Focus Funds registered returns of higher than 36 percent in the first half, ranking second and third.

“We chose shares that we believed were undervalued but had the competitiveness to rise,” said Lee Hyun-jin at Mirae Asset Management.

In the case of Hanwha Proud Korean Companies Securities Feeder Investment Trust Equity Fund, it had a relatively low profit rate until 2015. But the situation started to improve and it now ranks as the fourth most profitable general equity fund.

“We have started to lower our investment ratios for automobiles, chemicals and petroleum, where many of the large caps are,” said Kim Suh-young, who manages the 16 billion won fund at Hanwha Asset Management. “Instead we increased our investment in health and consumer necessities.”

“Our goal is to manage the fund with large caps in the center, but raise our profit rate by increasing the shares with potentials to rise.”

BY JUNG SUN-EAN [lee.hojeong@joongang.co.kr]