Mirae Asset Global Investments announced on the 7th that the ‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active (Synthetic) ETF’ achieved the highest individual net purchase on the listing day among all bond and interest rate ETFs to date.
According to the Korea Exchange, the newly listed ‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active (Synthetic) ETF’ on the 6th recorded individual net purchases of 23.2 billion KRW on its listing day. This is the largest scale ever among domestic bond and interest rate ETFs. It significantly surpasses the previous record of 7.4 billion KRW held by the ‘TIGER 25-10 Corporate Bond (A+ or higher) Active ETF.’
Amid growing investor interest in interest rate ETFs due to uncertainties in the stock and bond markets, the ‘TIGER 1-Year Negotiable Certificate of Deposit Active (Synthetic)’ offers the highest expected interest income among domestically listed interest rate ETFs. It is the first domestic product to invest in the 1-year CD (Negotiable Certificate of Deposit) rate, generating expectations for higher returns compared to existing KOFR and 91-day CD rate tracking ETFs, attracting individual investors’ attention from the first day of listing. This ETF was listed on the 6th with the largest ever domestic interest rate ETF scale of 230 billion KRW.
The ‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active (Synthetic) ETF’ calculates the 1-year CD rate on a pro-rata basis and applies daily compound interest, allowing investors to earn the 1-year CD daily rate as income even with just one day of investment, without any period or condition restrictions. It is the only domestic ETF tracking the 1-year maturity rate and is gaining attention as an alternative to bank time deposits. Unlike time deposits, it allows free buying and selling without early redemption fees and offers the benefit of daily compounding interest. Additionally, there are no interest rate conditions or deposit limits required to receive preferential rates.
The ‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active (Synthetic) ETF’ also offers benefits when used with Individual Savings Accounts (ISA). Recently, the Financial Services Commission announced plans to increase the annual ISA contribution limit from 20 million KRW to 40 million KRW and raise the tax-exempt limit from 2 million KRW (general type) to 5 million KRW. With higher contribution and tax-exempt limits, investors’ tax payments decrease accordingly, effectively increasing real investment returns. In particular, the ‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active (Synthetic) ETF’ is expected to provide deposit-like benefits to brokerage-type ISA investors who cannot invest in time deposits.
It is possible to invest 100% through retirement pension accounts, and when trading through pension accounts, taxation is deferred until withdrawal, with tax credits available. Upon pension receipt, a lower pension income tax rate (3.3~5.5%) applies instead of the dividend income tax (16.5%).
Jung Seung-ho, head of the FICC ETF Management Division at Mirae Asset Global Investments, said, “The ‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active ETF’ is a product with the nature of an ‘Exchange Traded Deposit’ pursuing returns at the level of a 1-year time deposit.” He added, “It can be a tailored product for investors who want deposit investments, especially with the expanded tax benefits of ISAs.”
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