'Bond Specialist' Woori Asset Management Launches Active Treasury Bond ETF

Inclusion of All Treasury Bond Segments... Enhancing Stability and Diversification Effects

[Asia Economy Reporter Hwang Yoon-joo] Woori Asset Management, renowned as a "bond specialist," is launching a bond-type active exchange-traded fund (ETF) product.

On the 11th, Woori Asset Management will newly list the active ETF "WOORI Daehanminguk Gukgochae Active," which benchmarks the government bond index.

The underlying index is the ‘KAP Korea Government Bond Total Return Index’ by Korea Asset Pricing, which includes all government bonds with a remaining maturity exceeding 3 months and rated Risk Free (no default risk). The duration of this index is approximately 8.8 years, and the yield to maturity is about 3.0%, similar to that of 10-year government bonds.

The ETF tracking this underlying index, ‘WOORI Daehanminguk Gukgochae Active,’ features broad coverage by allowing inclusion of government bonds across all maturities. It can also be used as a hedge for equity assets, making it attractive from a portfolio perspective.

Woori Asset Management, which launched the active ETF ‘WOORI AI ESG Active’ in January this year, is again releasing an active ETF aiming to achieve excess returns compared to the ‘KAP Korea Government Bond Total Return Index.’ Especially as Woori Asset Management is known as a "bond specialist," it plans to leverage its accumulated bond fund management expertise to generate excess returns.

Recently, with rapid interest rate hikes centered in the U.S., Korean government bond yields have also risen sharply in a short period. Experts predict that since the base interest rate hikes have been pre-reflected in government bond yields, the 10-year government bond yield may return to 2018 levels. Director Seo explained, “If interest rates decline, government bond prices will rise, allowing ‘WOORI Daehanminguk Gukgochae Active’ to generate additional returns.”

Meanwhile, having listed two ETFs, ‘WOORI AI ESG Active’ and ‘WOORI Daehanminguk Gukgochae Active,’ in the first half of the year, Woori Asset Management plans to accelerate its ETF business by listing six more ETFs this year.