KB Asset Management's ‘KBSTAR US Treasury 30-Year Yen Exposure (Synthetic H) ETF’ has surpassed 200 billion KRW in net assets.
Launched in December last year, the ‘KBSTAR US Treasury 30-Year Yen Exposure (Synthetic H) ETF’ is an exchange-traded fund (ETF) that seeks capital gains from investing in 30-year US Treasury bonds along with foreign exchange gains from fluctuations in the yen value.
On the 19th, after the Bank of Japan (BOJ), Japan's central bank, lifted its negative interest rate policy and decided to raise rates, the ETF recorded approximately 20 billion KRW in net individual purchases within seven days. The expectation of a rising yen exchange rate is leading to increased buying of the product.
The ‘KBSTAR US Treasury 30-Year Yen Exposure (Synthetic H) ETF’ uses the ‘KIS US Treasury 30-Year Yen Exposure Index’ as its underlying index, calculating the investment performance of US Treasury bonds with a remaining maturity of over 20 years in yen. It applies currency hedging to the USD-JPY exchange rate and currency unhedging to the JPY-KRW exchange rate, allowing investors to gain exposure to long-term US government bonds in yen regardless of fluctuations in the value of the US dollar.
After Japan announced its rate hike, if the US gradually lowers its rates and the interest rate gap between the two countries narrows, the operational costs of USD-JPY currency hedging will decrease, potentially leading to additional yield increases.
The ‘KBSTAR US Treasury 30-Year Yen Exposure (Synthetic H) ETF’ will change its operation method to monthly dividends. Previously, the interest generated from the underlying 30-year US Treasury bonds was reflected in the ETF's net asset value, but now the interest generated from US long-term bonds will be allocated as dividend funds and paid to investors monthly in the form of monthly distributions.
Starting next month, the dividend payment record date will change to ‘the last business day of each month,’ and investors holding the ETF at the end of April will be able to receive monthly dividends starting in May.
Yook Dong-hwi, Head of ETF Marketing at KB Asset Management, said, "With Japan's shift to a rate hike cycle, the ‘KBSTAR US Treasury 30-Year Yen Exposure (Synthetic H) ETF’ is gaining attention as a timely investment destination," adding, "As we have changed it to a monthly dividend ETF in response to investor demand, we expect additional capital inflows."
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