By Park Hyong-ki
Staff Reporter
Mirae Asset Investments, the country's largest asset management firm, has put an end to its fund investing in India equities as it was suffering steep losses amid global equity turmoil.
According to Zeroin, a fund evaluating body, the asset manager liquidated the ``Class-C2'' fund for institutional investors last week, after nine months of operations. The fund was at minus 20 percent at the time of liquidation.
The fund was introduced at the height of a bullish run on the Indian stock market in October last year. Thereafter, it gained approximately 19 percent on average until early this year, but the fund began to spiral downward as India came under rising inflationary pressure.
Mirae Asset noted that the public fund was managed like a private fund as institutional investors needed to invest at least 5 billion won if they wished to subscribe to the fund. The assets under management (AUM) of the fund reached 15 billion won at the beginning, and the company liquidated the fund after subscribers completely redeemed their investment.
The firm said the liquidation does not pose a problem as the fund AUM is considered minor compared with the market total.
``It was a minor, private fund when you compare it with the AUM of all Indian funds in the market, which is at around 2 trillion won,'' said a spokesman of Mirae Asset.
There are 26 Indian equity funds, according to Zeroin. They have recorded a loss of 39 percent on average since January, higher than the average loss of 21 percent for all overseas funds.
Meanwhile, the anti-trust agency warned Mirae Asset of unfairly supporting its affiliate ― Mirae Asset Securities ― as it offered higher brokerage fees to the securities firm than others.
The Fair Trade Commission (FTC) said the asset manager paid a brokerage commission of 0.15 percent to the securities affiliate for stock trading, compared to 0.1 percent given to non-Mirae Asset firms between June and November 2006. The agency only issued a warning, and no penalty charges as ``the firm volunteered to correct its wrongdoings, and given that the period was brief,'' said an FTC official.
Despite troubles, the company announced that its Luxembourg unit launched three mutual funds to regional retail investors. This is the first time a Korean asset manager has set up a unit in Luxembourg, established early this year, it offers funds exclusively to foreign investors.
``We decided to establish the unit in Luxembourg as it allows firms to market financial products developed there in a variety of regions after gaining regulatory approval from the Luxembourg financial authority,'' said a spokeswoman for Mirae Asset.
The three funds investing in Korea, China and Asia Pacific, respectively, will be marketed in Hong Kong, Singapore and the United Kingdom.
phk@koreatimes.co.kr