Samsung Asset Management "KODEX CD 1-Year Interest Plus Active, Switching to Monthly Dividends"

Samsung Asset Management announced on the 30th that it has converted the KODEX CD 1-Year Interest Rate Plus Active Exchange-Traded Fund (ETF) into a monthly dividend product. The existing product name was also changed from ‘KODEX 1-Year Bank Negotiable Certificate of Deposit+Active’ to ‘KODEX CD 1-Year Interest Rate Plus Active’ to enhance investors' understanding of the product.

Previously, the daily accrued earnings were accumulated in the ETF price and dividends were paid annually. Starting this month, the accumulated earnings over one month will be distributed to investors as dividends on the last business day of each month, switching to a monthly distribution method.

Ultra-short-term ETFs with a monthly dividend style are already operated as major products in the United States. BlackRock iShares’ SGOV has $29.5 billion in net assets, and SPDR’s BIL also records $35.8 billion in net assets.

With the monthly dividend conversion of KODEX CD 1-Year Interest Rate Plus Active, a solution has emerged that allows ‘investment in growth-type products with monthly installment savings while preserving principal.’ Conservative investors who want to protect their principal can invest in this parking-type ETF product to preserve their principal as much as possible while receiving monthly dividends, which are then automatically invested in long-term growth products such as S&P 500 TR or Nasdaq 100 TR through a ‘lump-sum + monthly installment’ hybrid investment approach.

In other words, for investors who want to use a lump sum in retirement pension or personal pension accounts as a ‘principal-preserving investment,’ investing 100 million KRW in KODEX CD 1-Year Interest Rate Plus Active allows them to receive approximately 260,000 KRW monthly as dividends, which are then automatically invested in growth-type products.

KODEX CD 1-Year Interest Rate Plus Active is regarded as an innovative product that breaks the mold of existing interest rate-linked ETFs, whose returns are determined solely by a specific benchmark interest rate. This product reflects the daily compounded return of one day’s worth of the 1-year CD (bank negotiable certificate of deposit) interest rate daily, and additionally aims to pay an extra daily return of 0.5% annually if the KOSPI 200 index rises by more than 1% in a day. Since listing, the annualized return has been about 3.54%.

Since listing, there have been 40 days (including holidays before holidays) when the KOSPI 200 index rose more than 1%. Due to this high performance, it has attracted investor interest and grown its net asset size to 1.8 trillion KRW. Individual investors have also contributed a cumulative net purchase of 68.6 billion KRW since its listing in April.

Shin Hyun-jin, a manager at Samsung Asset Management, said, “We changed the existing product name to be more intuitive and easier for investors to understand, and converted it into an interest rate-linked monthly dividend product in line with recent investment trends. We recommend trying this new investment method that goes a step further in efficiently managing idle investment funds by preserving principal as much as possible while investing in long-term growth U.S. index tracking products such as the U.S. S&P 500 TR or U.S. Nasdaq 100 TR through stable monthly cash flow.”