South Korea’s Samsung Active Asset Management will merge with Franklin Templeton Investment Trust Management Co. to provide diverse active fund products to the domestic and global market.

Samsung Active, fully owned by industry leader Samsung Asset Management, said that its board of directors endorsed a merger with Franklin Templeton Investment Trust Management, a wholly owned unit of Singapore-based Franklin Templeton Capital Holdings, on Wednesday.

Franklin Templeton Investment Trust Management began service in Korea in 1988.

Samsung Active was spun off from Samsung Asset Management in January last year as a separate entity to focus on active stock fund management. Both have around 6 trillion won worth assets under management.

Active funds, or actively managed funds, aim to outperform benchmark indices by using combined research and market forecasting by experienced portfolio managers unlike passive funds that track the performance of a particular index and buy all of securities in the benchmark.

The two companies plan to adjust their stakes to 50:50 after the merger by issuing shares. The merged entity would be in the top 20 in the local asset managing industry with a combined asset of 12 trillion won ($11.2 billion) under management. The nation’s biggest asset manager is Samsung Asset Management holding 220 trillion won worth asset under management, and the second biggest one is Mirae Asset Global Investment with 95 trillion won management asset.

Samsung Active expects the marriage would help it diversify active funds in the local market and customize products that Franklin is operating in the overseas markets for local investors, an official from the company said, adding that it could also utilize Franklin’s research capability.

The two firms plan to receive approval for the merger from the financial authority within the first half of this year and establish a new entity by the latter half.

By Hong Jang-won and Choi Mira

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