South Korea's exchange-traded fund (ETF) market has surpassed 500 trillion won ($385 billion) as of end-May 2026, prompting calls for asset managers to go beyond passive index tracking and take a more active role in corporate monitoring and proxy voting. According to a report by the Korea Capital Market Institute released on June 18, the net asset value of domestic ETFs grew from 100 trillion won in June 2023 to 200 trillion won in May 2025, 300 trillion won in December 2025, and 500 trillion won in May 2026. The share of ETFs in the total market capitalization of the KOSPI and KOSDAQ also rose from 2.2% at end-2020 to 7.5% at end-2025.
Growing ownership but limited influence
The surge in ETF assets has translated into larger equity holdings by asset managers. The value of stocks held through ETFs increased from 100 trillion won at end-2020 to 207 trillion won at end-2025. Because most domestic ETFs track market-cap-weighted indices like the KOSPI 200, inflows automatically boost managers' stakes in large-cap stocks. The report estimates that as of end-May 2026, ETFs held 53 trillion won in Samsung Electronics and 58 trillion won in SK Hynix, representing 2.9% and 3.5% of each company's market cap, respectively.
Despite these sizable holdings, the actual influence of asset managers remains limited. Passive funds are designed for long-term holding, making it difficult to sell shares as a form of pressure. Instead, engagement with companies and proxy voting become key tools to enhance corporate value. However, the report criticizes the current system for lacking transparency and rigor: some managers provide only perfunctory voting reasons such as "negligible impact on the general meeting" or "no infringement of shareholder rights." The organizational capacity and decision-making frameworks for shareholder rights also vary widely across firms.
Global peers show the way
Overseas asset managers have already adopted more proactive approaches. BlackRock, for instance, engaged with 2,373 companies across 42 countries in 2025, held dialogues with 1,811 firms, cast votes on 16,500 resolutions, and voted on 154,000 agenda items. The report's author, Kim Bo-young, stresses that domestic managers must build shareholder engagement systems commensurate with the large stakes they hold through ETFs. The National Pension Service is strengthening qualitative assessments of stewardship activities when selecting outsourced managers, and regulators last year added a new item to the stewardship code requiring checks on engagement for corporate value enhancement. These changes are expected to push asset managers toward strengthening conflict-of-interest management and internal controls, evolving from mere capital operators into responsible shareholders.