Surpassing 7 Trillion KRW in Net Assets in the Shortest Time Since Listing in June Last Year
Monthly Individual Net Purchase of 73.5 Billion KRW in January, Cumulative 357.3 Billion KRW
Samsung Asset Management announced on the 1st that the net assets of the KODEX CD Interest Rate Active (Synthetic) ETF have surpassed 7 trillion KRW.
According to the Korea Exchange, as of the 31st of last month, the net assets of the KODEX CD Interest Rate Active (Synthetic) ETF recorded 7.1117 trillion KRW. This figure was achieved 161 trading days after its listing in June last year.
The KODEX CD Interest Rate Active ETF is recognized as a representative parking-type ETF, attracting individual investors' funds. After the domestic and international stock markets rose sharply at the end of last year and bond yields fell significantly, some forecasts of a period of adjustment emerged, increasing investor interest in parking-type products that can prepare for such trends.
In fact, the 73.5 billion KRW of individual funds inflow last month and the cumulative net individual purchases of 357.3 billion KRW are the largest among parking-type ETF products. These figures surpassed the previous record of 63.9 billion KRW net individual purchases in December last year and cumulative net individual purchases of 283.8 billion KRW.
The reason why individual investors concentrate their net purchases on the KODEX CD Interest Rate Active ETF among parking-type products is analyzed to be because it is the only product that meets all conditions such as ▲high return stability ▲low effective transaction costs ▲ample liquidity.
Like in the United States, recently in South Korea as well, mixed expectations and disappointments about interest rate cuts have caused an inversion phenomenon where short-term rates are relatively higher in CD rates. The CD 91-day rate remains at the highest level of 3.68% per annum, drawing attention among investors as a 'parking' product.
The reason the KODEX CD Interest Rate Active ETF is recognized as the representative parking-type ETF for individual investors is that it calculates and compounds daily the interest rate level of the CD 91-day instrument on a pro-rata basis. This means that even investing for just one day without any period condition allows investors to receive the interest level of one day of the CD 91-day instrument as returns. In fact, since its listing in June last year, it has provided an average daily profit of 151 KRW per share without any loss on any of the 161 trading days.
Unlike other parking-type ETFs, it has the highest price per share at 1,025,280 KRW but applies the same 5 KRW bid-ask spread as other ETFs, offering abundant buy and sell quotes. This provides a significant advantage for investors who want to buy or sell the product at any time during the day, as they can do so with only about 5 KRW of effective transaction cost without worrying about price fluctuations.
Yoo Ah-ran, a manager at Samsung Asset Management, explained, "Amid increased uncertainty about the direction of the financial market, it is expected that the timing of the US interest rate cut will be delayed contrary to market expectations," adding, "The inversion phenomenon between different maturities is likely to continue for some time."
She continued, "Short-term interest rate products are expected to provide relatively higher yields," and added, "As a volatile market is expected to continue for the time being, parking-type investors' interest in the KODEX CD Interest Rate Active ETF, which invests with compound interest in the CD 3-month instrument that has a higher interest rate than the CD 1-year instrument, is expected to persist."
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