Hanhwa Investment & Securities "ACE ETF 2 Types, Continued Net Buying by Individuals Despite Volatile Market"

As volatility in the domestic stock market increases, the ACE KRX Gold Spot ETF and ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF are gaining popularity.

Korea Investment Trust Management announced on the 8th that individuals have been continuously net buying two types of ACE Exchange-Traded Funds (ETFs).

The ACE KRX Gold Spot ETF recorded 34 consecutive trading days of net buying by individuals from June 21 to July 7, while the ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF recorded 22 consecutive trading days of net buying by individuals since its listing on June 9. The inflow of individual investor funds during the consecutive net buying periods amounted to 30.2 billion KRW for the ACE KRX Gold Spot ETF and 27.6 billion KRW for the ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF.

In particular, the ACE KRX Gold Spot ETF recorded 5.4 billion KRW of net buying by individuals on the 5th, when a sidecar and circuit breaker were triggered in the domestic stock market for the first time in 4 years and 5 months. This ranked 8th in net buying by individuals among 873 ETFs listed on the Korea Exchange on that day.

The ACE KRX Gold Spot ETF is characterized by its inclusion of gold, which has a low correlation with stocks. Gold is a representative safe-haven asset and tends to see increased demand when market volatility rises. The ACE KRX Gold Spot ETF has also seen continuous inflows recently, surpassing 300 billion KRW in net asset value as of the 5th. The net asset value as of the previous day was 309.4 billion KRW.

The ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF is also growing rapidly. This is the result of continuous investment demand to avoid increased market volatility, reaching approximately 150 billion KRW in net asset value within one month of listing. As a parking-type product, the ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF aims for returns higher than the CD interest rate. In fact, as of the previous day, the product’s yield to maturity (YTM) was 3.66%, higher than the 91-day CD rate of 3.48%.

A common feature of the ACE KRX Gold Spot ETF and ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF is that they can be invested in through pension accounts. Since the ACE KRX Gold Spot ETF invests in physical gold, it can be invested up to 70% within retirement pension accounts, while the ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF can be held up to 100%.

Seunghyun Kim, head of ETF marketing at Korea Investment Trust Management, said, “At times of increased market volatility, we recommend paying attention to ACE KRX Gold Spot ETF and ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF from an asset allocation perspective.” He added, “Using defined contribution (DC) retirement pensions, individual retirement pensions (IRP), or individual savings accounts (ISA) when investing in ETFs can also provide tax deduction benefits.”

All ACE ETFs are performance dividend-type products, and principal loss may occur depending on management results. YTM does not guarantee fixed returns, so the YTM at the time of investment may not be realized depending on market conditions.