[Creative Hedge Fund Manager of the Year] Engagement Strategy on the verge of $1 trillion in assets under management
This article originally appeared on thebell on February 21, 2024 at 16:58.
One of the most dynamic hedge fund managers of 2023 was Life Asset Management. The firm has blazed its own trail with its engagement strategy of co-growth through corporate consulting, despite the activist winds of the past year. Its strategy of co-creating growth with companies has attracted institutional investors as it has boosted returns.
At the 2023 Korea Wealth Management Awards, hosted by Durbell and Durbell & Company and sponsored by the Financial Services Commission, Korea Federation of Banks, Financial Investment Association, Life Insurance Association, Korea Financial Consumer Protection Foundation, Korea Fund Evaluation, and KIS Asset Evaluation, Life Asset Management was named Creative Hedge Fund Manager of the Year.
“We were able to win this award thanks to Chairman Lee Chae-won, who led us from the front, Mr. Kang Dae-kwon, who realized our engagement strategy, and our employees, who followed us silently,” said Doo-woo Nam, CEO of Life Asset Management.
“With the recent corporate valuation program being prepared by the government, there seems to be more interest in shareholder value than ever before,” said Mr. Nam. “We will do our best to develop the financial market through engagement strategies that build friendly partnerships and increase shareholder value.”
Life Asset Management is a house that utilizes an engagement strategy among activism. It meets with company executives to show them how they can increase corporate value and convince them to join the organization. It then invests only in companies that accept its advice. It is activism in the sense that it works directly to improve stock prices, but it is called an engagement strategy because it maintains a collaborative relationship that does not harm the company and leads to real improvements.
ESG, which has gained increasing attention in recent years, is also one of the main criteria for investment. Companies that comply with non-financial values such as environmental (E), social (S), and governance (G) are also considered. We look for undervalued companies that have a stable business foundation and good management performance, but also meet ESG criteria. This ESG activism strategy has established Life Asset Management’s unique style among activist firms.
This unique strategy has attracted the attention of institutional investors. It is a “good fund” that invests in companies that meet ESG standards, but it also drives returns through intensive consulting. Life Asset Management’s assets under management were around KRW 310 billion in net assets at the beginning of last year, but exceeded KRW 900 billion by the end of last year. It has more than doubled in a year. The company is on track to reach the KRW 1 trillion AUM mark this year with the launch of at least four new funds.
This rapid growth is also attributed to its two-track strategy. Life Asset Management has split into two divisions to grow both traditional and non-traditional assets. Management 1, which focuses on engagement strategies, is led by Kang Dae-kwon, while Management 2, led by Nam Doo-woo, is in charge of non-traditional assets such as mezzanine and unlisted investments. Both are rapidly expanding with new funds.
The firm’s consistent returns also attract institutions. Life Asset Management’s flagship fund is the Life Korean Corporate ESG series, which was launched at the beginning of the company’s existence. Life Korea Corporate ESG 1 returned 32.1% last year, outperforming other ESG funds. In addition, Life Multicore 1, which is managed by the two investment departments, also performed well with a one-year return of 32.4%.
(reference) https://www.thebell.co.kr/free/content/ArticleView.asp?key=202402211224550080101157
