KODEX US Treasury Ultra 30-Year, Individuals Bought 100 Billion KRW in 6 Months

AUM Increases by 69.2 Billion This Year to 1.516 Trillion
Higher Profit Multiplier Effect When Interest Rates Fall Drives Individual Preference

Individual investors' interest in long-term bonds is growing stronger.

Samsung Asset Management announced on the 14th that individual investors have net purchased 102.3 billion KRW worth of the ‘KODEX US Treasury Ultra 30-Year Futures (H) ETF’ in six months. Net purchases of 7.9 billion KRW also flowed in through bank trust channels, which are frequently used by individual investors.

In particular, the net buying trend by individual investors, which began in earnest when the 30-year US Treasury market yield exceeded 4% in October last year, has strengthened this year, with about 41 billion KRW flowing in over the past month. The net asset value (AUM) of this product also increased significantly by 69.2 billion KRW this year, reaching 151.6 billion KRW.

This preference for long-term bonds among individual investors is analyzed to be due to the prevailing expectation that overall bond yields will decline from current levels, considering recent financial markets and long-term economic conditions, despite bond yields rising again recently amid forecasts that the US interest rate hike trend would continue for some time. Investors are increasingly viewing rising bond yields as an investment opportunity.

Moreover, since long-term bonds with longer duration (the average recovery period of invested funds) can generate more returns than short-term bonds when bond yields fall, individual investors are investing in long-term bonds with a long-term perspective even if bond yields rise temporarily.

In fact, since bond yields began rising again in February, individual investors have shown strong buying momentum, net purchasing 46.1 billion KRW every trading day for 24 consecutive trading days without exception during the bond yield increase period.

The ‘KODEX US Treasury Ultra 30-Year Futures (H) ETF’ is a product that allows investment in 30-year US Treasuries with a small amount of money. Its underlying index follows the S&P Ultra T-Bond Futures Excess Return Index, with a duration of about 17 years and an annual total expense ratio of 0.3%.

Im Tae-hyuk, Executive Director of the ETF Management Division at Samsung Asset Management, said, “The KODEX US Treasury Ultra 30-Year Futures (H) ETF is the longest-term overseas bond investment product among ETFs listed in Korea. Ultra-long-term interest rates serve as an indicator to gauge future economic directions, and the buying momentum continues among investors who see a high possibility of economic recession due to the recent sustained interest rate hikes.”

He added, “With new policy decision variables emerging, such as the recent bankruptcy of Silicon Valley Bank (SVB), expectations for interest rate declines are rapidly increasing rather than interest rate rises exceeding market forecasts, so demand for US long-term bonds is expected to continue for the time being.”

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