Hanhwa Investment & Securities, Two Korea-US Long-Term Bond ETFs... "Net Asset Value Surpasses 700 Billion Won"

Korea Investment Trust Management announced on the 7th that the combined net asset value of two ACE exchange-traded funds (ETFs) investing in long-term bonds in Korea and the United States has exceeded 700 billion KRW. The two products are the ACE US 30-Year Treasury Active (H) ETF, which invests in 30-year US Treasury bonds, and the ACE 10-Year Korean Treasury ETF, which invests in 10-year domestic government bonds.

As of the 6th, the combined net asset value of the ACE US 30-Year Treasury Active (H) ETF and the ACE 10-Year Korean Treasury ETF was recorded at 727 billion KRW. The net asset value of each product is 420.1 billion KRW for the ACE US 30-Year Treasury Active (H) ETF and 306.9 billion KRW for the ACE 10-Year Korean Treasury ETF. The ACE US 30-Year Treasury Active (H) ETF has surpassed 400 billion KRW in net assets within just eight months of listing.

The ACE US 30-Year Treasury Active (H) ETF is Korea Investment Trust Management’s first physically-backed US long-term Treasury ETF launched domestically, and also its first monthly dividend ETF. It uses the 'Bloomberg US Treasury 20+ Year Total Return Index' as its benchmark. The ETF includes US-issued 30-year Treasury bonds with a remaining maturity of 20 years or more. The cumulative net purchase amount by individual investors over the eight months since its listing reached 244.8 billion KRW, the largest individual net purchase volume among bond ETFs listed domestically during the same period.

The ACE 10-Year Korean Treasury ETF was listed in October 2020. Its underlying index is the 'KIS 10-Year Treasury Total Return Index,' and it invests in 10-year Korean government bonds representing the domestic long-term government bond market. The average duration (weighted average maturity) of the 10-year government bonds is longer than the domestic bond market duration (5 years). This allows for relatively higher capital gains when interest rates decline. The ETF reduced its total expense ratio to 0.02% in 2021, the lowest level among 10-year government bond ETFs listed domestically.

Both the ACE US 30-Year Treasury Active (H) ETF and the ACE 10-Year Korean Treasury ETF are physically-backed ETFs and can be invested in up to 100% within pension accounts such as individual retirement pensions and corporate retirement pensions. Long-term investment through pension accounts offers tax credit and tax deferral benefits.

Kim Chan-young, Head of Digital ETF Marketing at Korea Investment Trust Management, said, "Both the ACE US 30-Year Treasury Active (H) ETF and the ACE 10-Year Korean Treasury ETF are products that can benefit during periods of interest rate cuts," adding, "Historically, long-term bond prices have risen from the point when interest rate hikes end during rate cut periods, so now is an opportune time to buy the ACE US 30-Year Treasury Active (H) ETF and the ACE 10-Year Korean Treasury ETF."

Meanwhile, both the ACE US 30-Year Treasury Active (H) ETF and the ACE 10-Year Korean Treasury ETF are performance-distributing products, and principal loss may occur depending on management results.