Korea Investment Trust Management announced on the 7th that it will launch the ‘Korea Investment Ultra-Short-Term Tomorrow Dream Fund,’ a public fund investing in ultra-short-term bonds, through Korea Investment & Securities.
The Korea Investment Ultra-Short-Term Tomorrow Dream Fund is the first ultra-short-term bond-type public fund introduced by Korea Investment Trust Management. Ultra-short-term bond-type public funds are interest rate products containing high-quality short-term bonds with maturities of three months or less. They are parking-type products where interest income accumulates even with just one day of investment. Redemption requests are paid at the T+1 base price within two business days. Similar to money market funds (MMFs), they have a short redemption cycle, offering excellent liquidity.
The main assets included in the Korea Investment Ultra-Short-Term Tomorrow Dream Fund are ▲ bonds rated A- or higher ▲ corporate commercial papers rated A1 to A2 ▲ cash-equivalent assets such as negotiable certificates of deposit (CDs), time deposits, and issued notes.
To minimize price fluctuations, the weighted average maturity (duration) is maintained at around 0.15 years. The shorter the duration, the lower the interest rate sensitivity, which reduces volatility in the current environment where interest rate fluctuations are likely. Capital losses from rising interest rates can be offset by interest income. However, adjustments may be made depending on future macroeconomic and financial market policies domestically and internationally.
The Korea Investment Ultra-Short-Term Tomorrow Dream Fund also pursues excess returns through three strategies. The stock selection strategy analyzes relatively undervalued securities within the same rating to select bonds with high investment merit. Through the interest income pursuit strategy, it selects credit bonds with short maturities, high yield to maturity (YTM), and liquidity to maximize holding gains (carry income). Using repurchase agreement (Repo) sales, it secures short-term liquidity within 50% of the total fund amount and seeks additional investment opportunities with the procured funds.
As a risk management measure, the fund plans to maintain a safe asset ratio to respond smoothly to redemption occurrences.
The fund operation will be managed by Kim Dong-joo, head of FI Operations Division 1 at Korea Investment Trust Management, who has over 18 years of experience as an individual and retirement pension bond fund management expert. Currently, Kim manages short-term bond-type public funds totaling KRW 4.0553 trillion as of the previous day (6th), including Korea Investment Trust Management’s money market funds (MMFs) and Korea Investment e-Short-Term Bond ESG Fund. Based on his accumulated experience in managing short-term bond products, Kim plans to operate the ‘Korea Investment Ultra-Short-Term Tomorrow Dream Fund’ stably.
Kim said, "As the Bank of Korea’s interest rate cut cycle has begun, the demand for efficient management of customers’ idle funds is continuously increasing," adding, "Demand for ultra-short-term bond products will also continue to grow."
He further added, "This product is classified as a stable product in retirement pension (DC·IRP) accounts, allowing investment up to 100% of the limit."
The Korea Investment Ultra-Short-Term Tomorrow Dream Fund is a performance-distributing product, so principal loss may occur depending on the management results, and the yield to maturity (YTM) may vary depending on the investment timing, so caution is required when investing.
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