KB Asset Management Launches KB US Treasury Split Purchase Target Conversion Fund with 50 Billion KRW

KB Asset Management announced on the 21st that it has launched the ‘KB US Treasury Dollar-Cost Averaging Target Conversion Fund’.

During the subscription period from the 8th to the 16th, a total of 50.3 billion KRW was raised through KB Kookmin Bank and KB Securities. The fund’s maturity date is set for 3 years from the initial establishment date.

The ‘KB US Treasury Dollar-Cost Averaging Target Conversion Fund’ invests in US Treasury bonds and other securities to secure stable interest income, while pursuing excess returns through long-term bond investments with high duration effects when interest rates decline.

At the initial stage, the fund invests in US Treasury bonds with maturities around 2 years and exchange-traded funds (ETFs) with low duration risk, then employs a dollar-cost averaging strategy by switching to US long-term Treasury bonds with maturities over 10 years depending on market conditions.

The fund’s target return is 6% (based on Class A), and upon achieving the target return, all previously held US Treasury-related assets will be sold. Until the trust contract period ends, the fund plans to invest in domestic short-term bond ETFs and money market funds (MMFs) to realize profits and minimize price volatility risk.

It also implements a flexible currency hedging strategy according to exchange rate fluctuations. After the establishment date, it executes 70-100% KRW-USD currency hedging. If the KRW-USD exchange rate is below 1,150 KRW, 50% hedging is performed; if it is below 1,050 KRW, 100% currency exposure is maintained for investment.

Lee Seok-hee, Head of Pension WM Division at KB Asset Management, said, “The ‘KB US Treasury Dollar-Cost Averaging Target Conversion Fund,’ which invests in US long-term bonds, offers a target return of 6% and a duration of about 15 years, providing an efficient investment opportunity during periods of interest rate cuts.”

Individual investors interested in the KB US Treasury Dollar-Cost Averaging Target Conversion Fund can also consider a similar product, the ‘KB US Long-Term Bond 10-Year Plus Fund.’ The KB US Long-Term Bond 10-Year Plus Fund is available for subscription through KB Securities, Kookmin Bank, and Korea Investment & Securities.