Foreign asset management companies operating in South Korea have begun streamlining as they lose capital from poor fund performance.

According to the asset management industry on Sunday, JPMorgan Asset Management Korea Co. let go of five executives and employees, tantamount to more than 10 percent in its previous staff tally of 40. Five managers of the active funds were unaffected by the restructuring.

JPMorgan Asset Management Korea, a subsidiary of U.S.-based large banking and financial service company JPMorgan Chase & Co., entered the Korean market in 2007.Cha Seung-hoon has been heading the company for nearly a decade now. The asset management company introduced investments earmarked for rising emerging markets of Brazil, Russia, India, China and South Africa (BRICs), and its JPMorgan Korea Trust investing in local shares once drew over 500 billion won ($435.9 million).

The slump in emerging markets took a toll on its performance, leading to a run and shriveled capital. The scoreboard of multinational asset corporate names has turned pitiful. The 460 billion won JPMorgan Russia funds in three-year and five-year maturity yielded a negative return of 30 percent and 47.62 percent, respectively. The yield on the five-year 180 billion won JPMorgan Natural Resource fund plunged to a negative return of 72 percent. During the last year, over 500 billion won was pulled out of the JPMorgan Korea Trust and JPMorgan Short-term High Yield funds.

Franklin Templeton asset management office in Korea whose deposits were reduced by 430 billion won last year is also mulling restructuring including staff scale-down and new product release. It plans to reduce staff in various ranks, and Korean bond managers are one of the targets, suggesting change in its operation that had primarily served institutional players and local market.

Trust funds of Schroders Korea`s asset management that reached 5.25 trillion won at the end of 2012 were halved to 2.24 trillion won by the end of last year. Trust at Fidelity International`s asset management office in Korea sank to 1.55 trillion won this year compared with 2.28 trillion won late 2012. The company cut down six from 42 staff in September last year.

Trust deposits at smaller companies such as Macquarie`s asset management office in Korea and AllianceBernstein Korea all fell below 1 trillion won.

“As foreign asset management firms fight over the limited pool of pension funds and other large institutional players, some are prepared to leave the market due to poor profitability,” said John Lee, CEO of Meritz Asset Management Co.

By Han Ye-kyung, Lee Yong-gun

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