KODEX TRF7030, 5-Year Long-Term Return of 70%

Samsung Asset Management announced on the 15th that the KODEX TRF7030 ETF recorded a 5-year return of 70.6% since its listing, surpassing TDF, the representative pension asset allocation product.

Maintaining investment proportions (TRF) outperformed adjusting investment proportions according to retirement timing (TDF). It is expected to become another investment option for pension investors.

According to FN Guide data, the KODEX TRF7030, listed in July 2019, achieved a 5-year return of 70.6%, ranking first among 71 domestic TDF products with more than 5 years of operation. Its 3-year return is 34.4%, maintaining a top-tier level.

TRF (Target Risk Fund) operates by pre-setting the proportions of stock and bond investments and maintaining those proportions regardless of market conditions. If the investment proportions change due to portfolio asset returns, the fund rebalances by selling assets with increased proportions and buying more of those with decreased proportions to restore the originally designated investment proportions. Through rebalancing, TRF products prepare for upswings by additional purchases during asset downturns and prepare for downturns by selling assets whose proportions have increased during upswings. Compared to general investment products, this allows for more stable profit defense, resulting in relatively outstanding performance even in volatile or sideways markets.

The KODEX TRF 7030 ETF was managed by diversifying investments between global developed country stocks, represented by the MSCI World Index of developed countries, and domestic bonds at a 7 to 3 ratio. Rebalancing was continuously performed to maintain the 7 to 3 stock-to-bond investment ratio according to market conditions.

Composing all included assets entirely of ETFs or physical bonds minimized costs associated with rebalancing trades, which also contributed to improved long-term returns. Despite conducting about 15 rebalancing trades annually on average, the total expense ratio of the KODEX TRF 7030 ETF is about 0.3% per year, roughly one-third that of typical TDF products.

Samsung Asset Management currently operates three KODEX TRF active ETFs?TRF7030, TRF5050, and TRF3070?as global asset allocation products, investing in ‘developed country MSCI ETFs and domestic bonds’ according to pre-set investment proportions. The first two digits indicate the proportion invested in global developed country stocks, and the last two digits indicate the proportion invested in domestic bonds. As the high long-term performance of KODEX TRF ETFs became known, approximately 35 billion KRW flowed in from bank accounts presumed to be individual investors, with about 40 billion KRW of individual investment funds flowing into the three TRF ETFs this year alone. The net assets of KODEX TRF ETFs total 243.6 billion KRW, with 40 billion KRW for 7030, 36.2 billion KRW for 5050, and 167.4 billion KRW for 3070.

Park Seong-cheol, head of ETF Management Team 1 at Samsung Asset Management, explained, "The KODEX TRF active ETFs are global asset allocation ETFs designed for long-term investment, characterized by a low probability of principal loss during long-term investment due to the rebalancing investment effect, even in sideways or volatile markets." He added, "They will be a good investment choice not only for long-term pension investors but also for bank trust investors who prefer stable products."