Hantoo Asset Management's Korea Investment US Long-Term Treasury Bond Fund Series Surpasses 300 Billion KRW in Assets Under Management

Korea Investment Trust Management announced on the 26th that the Korea Investment US Long-Term Treasury Bond Fund series has surpassed 300 billion KRW in assets under management. The Korea Investment US Long-Term Treasury Bond Fund series consists of a hedged (H) type, an unhedged (UH) type, and a US dollar (USD) type.

According to the Korea Financial Investment Association, the assets under management of the Korea Investment US Long-Term Treasury Bond Fund series first exceeded 300 billion KRW on the 21st, reaching 306.3 billion KRW. As of the 23rd of this month, it stood at 333 billion KRW. After initially surpassing 200 billion KRW with 203.8 billion KRW on the 8th, an additional 102.5 billion KRW of individual funds flowed in over the next nine trading days.

During the same period, the assets under management of domestic public funds (including ETFs) investing in US bonds increased by 139.1 billion KRW, from 6.7032 trillion KRW to 6.8423 trillion KRW. This means that 73.69% of the funds flowing into the US bond fund market originated from the Korea Investment US Long-Term Treasury Bond Fund series.

The rapid inflow of funds into this fund is attributed to a combination of factors including the recent global stock market correction, individual investors’ expanding expectations for a US interest rate cut, increased preference for safe assets, and pursuit of high-interest assets.

The Korea Investment US Long-Term Treasury Bond Fund series, launched by Korea Investment Trust Management in April, is characterized by investing exclusively in US long-term treasury bonds, unlike previously established US long-term bond-related public funds (excluding ETFs). It is the first public fund to invest solely in US long-term bonds without including risky assets such as corporate bonds. The fund series invests in US long-term treasury bonds with a remaining maturity of over 10 years, guaranteed by the US government, aiming to generate returns when US benchmark interest rates decline.

The 3-month average return of the Korea Investment US Long-Term Treasury Bond Fund series is 6.53%, outperforming the comparison group (US bond public funds) average return of 4.46% during the same period. The average return since the fund series’ inception is 5.50%.

Ji-won, the lead portfolio manager of Korea Investment Trust Management’s Global Strategy Management Department, stated, “The market consensus is that the Federal Open Market Committee (FOMC) meeting in September will mark the beginning of the Federal Reserve’s gradual normalization of policy interest rates. However, recent US long-term bond yields partially reflect expectations of a rate cut by the end of this year, so rather than a sharp decline due to a rate cut, a gradual downward trend is expected as the fundamentals of the US economy are confirmed.”

He added, “US Treasury bonds, one of the representative global safe assets, are necessary for portfolio stability during periods of increased volatility in global financial markets. Investing through the Korea Investment US Long-Term Treasury Bond Fund series allows investors to receive stable interest payments guaranteed by the US government while maximizing compound interest effects through reinvestment at high rates. Additionally, when interest rates decline in the future, investors can expect relatively high capital gains by utilizing the long duration.”