The Nation's First 'Foreign Currency MMF' to Launch This Month... Asset Management Firms in Fierce Competition

Investing in MMFs with Foreign Currency Assets
Potential Currency Gains from Strong Dollar
KB Asset Management and Others Aim to Capture Market Lead

[Asia Economy Reporter Junho Hwang] The country's first foreign currency Money Market Fund (MMF) is expected to be launched as early as the end of this month. It is a short-term financial product that can yield higher profits than foreign currency deposits while benefiting from the strong dollar.

According to the financial investment industry on the 5th, KB Asset Management, Mirae Asset Global Investments, and others have begun structuring products for the launch of foreign currency MMFs and plan to release products as early as the end of this month. Samsung Asset Management and Shinhan Asset Management are also considering launching such products.

Leading the way is KB Asset Management. Typically, MMFs are offered for individual investors and institutions, and the individual product configuration has been finalized. KB Asset Management is preparing a fund-of-funds product named ‘KB Star Individual Dollar Short-Term Fund Securities Investment Trust,’ which invests 70% of its assets in the HSBC US Dollar Liquidity Fund (annual yield 2.39%). When investors invest in the ‘KB Star Individual US Dollar MMF,’ KB Asset Management invests in this fund and manages the fund’s liquidity. For institutional MMFs, KB Asset Management plans to structure products that are directly managed, unlike the individual ones.

Foreign currency MMFs are products where export-import companies or overseas stock investors who need to hold foreign currency assets such as US dollars can place funds for a short period. They came into the spotlight after the Financial Services Commission permitted their introduction on the 29th of last month to promote public funds.

The industry points out that the strength of foreign currency MMFs lies in the ability to place funds for a longer period than existing foreign currency RPs, earning higher returns than foreign currency deposits (foreign currency demand deposits 1.8%, time deposits 2.1%). Especially if the current strong dollar trend continues, investors can also gain from foreign exchange gains, which is expected to drive demand.

Mirae Asset Global Investments also stated, "We are currently preparing an MMF that operates in foreign currency short-term financial assets such as foreign currency government bonds, CDs, and RPs to provide returns and are in discussions with authorities," adding, "With the future launch of various foreign currency MMF products, product diversification will be possible in the domestic dollar short-term fund market, which is currently centered on foreign currency deposits."

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