KODEX US 10-Year Treasury Active (H) ETF Newly Listed

Amid growing expectations that a U.S. benchmark interest rate cut is imminent, an exchange-traded fund (ETF) based on U.S. Treasury bonds-which can provide capital gains when interest rates fall-has been launched.

On August 19, Samsung Asset Management announced the listing of the "KODEX US 10-Year Treasury Active (H)" ETF, which invests in U.S. mid- to long-term Treasury bonds. The ETF allocates up to 30% of its assets to U.S. Treasury bonds with maturities of 7 to 10 years, and invests the remainder in U.S.-listed ETFs tracking 10-year U.S. Treasuries.

The 10-year U.S. Treasury bond is a representative instrument in the U.S. bond market. Its yield is linked to rates on mortgage loans, student loans, and corporate financing, thereby affecting the broader U.S. economy. It serves as a benchmark rate for the U.S. economy and is often used as an indicator of the economy's overall health.

The effects of policy rate cuts are typically reflected first in short-term rates, then in long-term rates. During rate-cut cycles, the 10-year Treasury yield tends to respond more sensitively to rate reductions compared to the 30-year Treasury yield. Additionally, the 10-year Treasury has a shorter duration (weighted average maturity) than the 30-year, resulting in lower volatility. Even if rate cuts do not occur as quickly as expected, this helps limit potential losses, making it an attractive option for investors seeking stable returns.

KODEX US 10-Year Treasury Active (H) aims to reduce volatility while fully capturing the benefits of rate cuts through investment in 10-year U.S. Treasuries. To provide investors with various cash flows, the ETF pays monthly dividends, based on holdings as of the 15th of each month.

Employing a currency-hedged strategy, the ETF eliminates the impact of exchange rate fluctuations, allowing investors to focus solely on price movements of the 10-year U.S. Treasury. Samsung Asset Management described the product as useful for investors who want to concentrate on the intrinsic value of the underlying asset without concerns about dollar strength or weakness.

Park Sungcheol, head of ETF Management Team 1 at Samsung Asset Management, explained, "The U.S. Federal Reserve has recently emphasized the importance of employment indicators in its monetary policy decisions, and the July U.S. employment data significantly undershot expectations." He added, "We anticipate a policy rate cut in September, with the possibility of more than three cuts within the year. The KODEX US 10-Year Treasury Active (H) ETF is designed to fully capture the benefits of rate cuts while providing a steady cash flow through monthly dividends."

KODEX US 10-Year Treasury Active (H) can be fully invested through defined contribution (DC) retirement plans, individual retirement pension (IRP) accounts, and pension savings accounts, making it a suitable pension ETF for stable returns and tax benefits. Since it pays monthly dividends, investors can receive stable mid-month distributions in their pension accounts, reinvest them, and enjoy tax advantages. When invested through a brokerage-type ISA, investors can benefit from tax exemptions (KRW 2 million for general accounts, KRW 4 million for basic accounts) and a preferential 9.9% separate taxation rate.