Bae Jae-kyu of Korea Investment Management - 'Now Is the Time to Invest in Tech Stocks, Not Manufacturing'

(Seoul=Yonhap Infomax) Yo Been Noh – "The purpose of investing is to generate wealth in the future. Today, it is technology companies that are leading the world. Do not even consider investing in manufacturing stocks," said Bae Jae-kyu, CEO of Korea Investment Management Co., at the 'ACE ETF Rebranding 3rd Anniversary Investment Seminar' on the 24th.

Bae emphasized that investing in technology stocks is the most effective strategy for individual investors seeking success. In his recently published book, "Anyone Can Become Wealthy Through Investing," Bae analyzes how the era of technology companies leading the global economy began with the advent of the internet in the 2000s.

He argued that in this era, long-term investment in tech stocks is the key to wealth creation. "The era of manufacturing is over," Bae said. "Manufacturing companies require capital expenditures and factories to increase sales, and they need raw materials to grow revenue."

He continued, "Tech companies only need three things: ideas, computers, and electricity. That's why they can start in a garage, without the need for heavy capital investment or land."

Bae defined investment as the act of deferring today's consumption for future returns, and stressed that long-term investment in technology stocks offers the highest probability of success. "Investment is about earning money in the future," he said. "It is about postponing today's consumption for returns at a specific point in the future."

He added, "If technology companies generate profits in a quadratic function, manufacturing companies are only linear." Bae also noted that, beyond logically selecting investment targets, investors must overcome volatility after investing.

"Overcoming volatility after investing is an emotional challenge," Bae said. "Investors need to understand themselves and recognize if they cannot withstand emotional swings."

He warned, "If returns exceed expectations, volatility increases and long-term investment becomes difficult. For example, if you expect a 20% return but consistently achieve 40-50%, you may feel uneasy and risk abandoning your investment."

Bae also advised against investing in individual stocks. Since 2015, the Nasdaq 100 index has experienced a maximum drawdown (MDD) of over 30% only once, but Nvidia Corp. alone has seen four such events: twice over -30%, once over -50%, and once over -60%.

Specifically, Bae recommended investing in exchange-traded funds (ETFs) tracking the Nasdaq 100 index over the S&P 500 as a long-term strategy.

Since Bae joined Korea Investment Management, the firm's ETF business has grown significantly. The company now ranks third among domestic asset managers by market share, with ETF assets under management rising from 7 trillion won ($5.9 billion) to 20 trillion won ($16.9 billion), nearly tripling.

Bae took office in February 2022 and led a major rebranding of the firm's ETF business from 'KINDEX' to 'ACE' in October of that year. Currently, ACE ETFs comprise 103 products, with 56 new offerings launched since the brand's inception. Notably, 90% of these ETFs are based on proprietary indices developed in-house.

ybnoh@yna.co.kr

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