Ants Captivated by Bonds... Surge in ETF Launches

Expansion of Ant Bond Buying and Selling
Surge in ETF Launches as Interest in Bonds Grows

[Asia Economy Reporter Junho Hwang] Individual investors have also fallen for bonds. As the stock market declined and interest rates rose, they began to knock on the door of the bond market, which was once considered the domain of experts. Asset management companies observing the 'money move' of individuals have launched various exchange-traded funds (ETFs) for bond beginners (chaerini) who find it difficult to enter the bond market, aiming to attract funds.

According to the financial investment industry on the 25th, five bond-type ETFs were simultaneously listed on the 23rd. These ETFs are characterized by their differentiation from existing bond ETFs.

Samsung Asset Management introduced Korea's first ESG (Environmental, Social, Governance) comprehensive bond ETF, 'KODEX ESG Comprehensive Bond (A-grade or higher) Active.' It is distinctive in that it uses bonds reflecting ESG factors to achieve excess returns.

In addition, Mirae Asset Global Investments launched 'TIGER Investment Grade Corporate Bond Active,' the first ETF investing broadly in investment-grade corporate bonds such as domestic A+ credit-rated financial bonds, attracting capital inflows.

Korea Investment Management released 'KINDEX U.S. Dollar Bond Active,' a short-term bond ETF investing in bonds with a remaining maturity of less than one year and a rating of AA- or higher.

Asset managers plan to launch bond-type ETFs with maturities next month. The Korea Exchange has begun preparations for introducing bond-type ETFs with maturities. Korea Investment Management is scheduled to list 'KINDEX U.S. S&P 500 Bond Mixed Active ETF' and 'KINDEX U.S. Nasdaq 100 Bond Mixed Active ETF' on the 26th.

Bonds issued by the government, local governments, financial companies, and corporations to borrow long-term funds move inversely to interest rate directions. As the market interest rates rose following the U.S. and South Korea's base rate hikes this year, bond prices sharply dropped. Consequently, individual investors seeking low-price purchases flocked to bond investments.

Kim Chanyoung, head of Digital ETF Marketing at Korea Investment Management, explained, "Recent interest in bonds can be seen as interest in buying at low prices. Although bond investment might be considered unfavorable during periods of rising interest rates, various methods such as trading bond inverse ETFs can generate profits."

Jo Junghoon, manager of Samsung Asset Management operating KODEX ESG Comprehensive Bond (A-grade or higher) Active, advised, "From an individual perspective, direct bond investment is practically difficult due to high trading units (100 billion KRW units for on-exchange trading) and limitations on the number of issues. Utilizing public funds or bond ETFs allows investment in various bonds with lower amounts, enhancing accessibility."

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