KB Asset Management Launches Korea's First 5-Year Government Bond Futures ETF

[Asia Economy Reporter Junho Hwang] KB Asset Management launched the country's first exchange-traded fund (ETF) tracking medium-term government bond futures on the 31st.

The KBSTAR 5-Year Treasury Futures Tracking ETF is based on the Korea Exchange (KRX) 5-year Treasury futures tracking index and tracks the performance of 5-year Treasury futures. The KBSTAR 5-Year Treasury Futures Inverse ETF tracks -1 times the daily return of the 5-year Treasury futures.

Currently, there are 19 government bond-related ETFs (including inverse ETFs) listed. However (6 for 3-year bonds, 9 for 10-year bonds, and 4 mixed), this is the first product tracking 5-year Treasury bonds.

Banks and insurance companies, whose average bond maturity (duration) is around 5 years, had difficulties managing their portfolios due to the lack of 5-year products to respond to interest rate changes, but investment and hedging have become possible through the 5-year Treasury futures tracking ETF.

Following the launch of three bond ETFs in May to expand its lineup, KB Asset Management has completed its maturity-based government bond ETF lineup with this listing.

Geum Jeongseop, head of the ETF Strategy Office at KB Asset Management, said, "Institutional investors, who occupy more than 90% of the government bond market, can now invest in bonds using ETFs in response to interest rate fluctuations," adding, "Demand for the 5-year Treasury futures ETF, which mixes the 3-year Treasury futures index and the 10-year Treasury futures index at a ratio of 7 to 3, will gradually increase."

Meanwhile, KB Asset Management operates 22 bond ETFs, the largest number among the approximately 60 bond ETFs listed domestically. Its ETF market share has increased from 6.5% at the end of last year to about 9% recently.

This content was produced with the assistance of AI translation services.