Shinhan Asset Management Achieves Target Return for 'Shinhan US Long-Term Treasury Target Conversion Fund No. 4'

Shinhan Asset Management announced on the 11th that the ‘Shinhan US Long-Term Treasury Target Conversion Fund No. 4’ has exceeded its target return of 8%.

This performance was achieved within three months since its launch on September 22. The fund actively responded to the rapidly declining market interest rates caused by the lower-than-expected US CPI (Consumer Price Index) in November, reaching its target return 2 years and 9 months ahead of the maturity date (3 years).

After achieving the target return, the fund will sell all existing assets and invest in domestic short-term government bonds and liquid assets until September 2024, which marks one year from the fund’s inception, to secure the profits. Additionally, the conversion reference price of the fund is 1091.7 KRW. Investors can expect a return of 9.1%, exceeding the target return.

Shinhan Asset Management focused on the fund’s strategy that long-term interest rates tend to decline amid concerns about economic slowdown as the US Federal Reserve approaches the later stages of its rate hike cycle. The fund invested in US Treasury bonds and related ETFs with a duration of about 15 years. By employing currency hedging, it minimized exchange rate risk and achieved the target return quickly.

Lee Seonghee, head of the overseas bond management team at Shinhan Asset Management, said, “With the end of the US rate hike cycle and the growing expectation of a rate cut cycle entering within 2024, the trend of weakening economic indicators continues, resulting in relative strength in the long-term bond segment.” He added, “We will continue to do our best in managing the fund to ensure the successful redemption of funds reaching maturity or early repayment in the future.”