KODEX KOFR Interest Rate Active Records 'No Loss for 1 Year' Since Listing

1-Year Yield 2.8%
Daily Interest Income Without Loss, Consecutive Record Highs

The KODEX KOFR Interest Rate Active (Synthetic) ETF has set a remarkable record of ‘zero daily net asset value loss’ for one year since its launch.

Samsung Asset Management announced on the 26th that the KODEX KOFR Interest Rate Active ETF, which was first listed domestically on April 26 last year, has not experienced any daily decline in returns for one year and has continuously reached new highs. This is the first record of its kind since ETFs were introduced in Korea in 2002.

This daily zero-loss record is possible because the KODEX KOFR Interest Rate Active ETF is designed to track the underlying risk-free benchmark interest rate KOFR through a stable cash-lending structured approach. In fact, some other products that track KOFR using different methods have already recorded daily losses.

KOFR is a risk-free benchmark interest rate index that guarantees daily interest income regardless of the interest rate market situation, as it deals with products with a duration, meaning the average recovery period of investment funds, of one day.

However, Samsung Asset Management designed the product by designating counterparties and entering into collateralized synthetic contracts to track KOFR through actual operations, as net asset value could incur losses depending on circumstances, and to consistently achieve excess returns linked to the underlying KOFR index’s yield.

In fact, the recent one-year return is 2.77% per annum, exceeding the KOFR underlying index’s annual return of 2.72%.

The KODEX KOFR Interest Rate Active (Synthetic) ETF has gained tremendous popularity among institutional and individual investors over the past year. Due to its unique feature of guaranteed daily interest income, institutional investors focused on liquidity management participated actively, and individual investors actively traded on the market to park funds for a short period. It surpassed 1 trillion KRW in net assets in less than two months, setting the shortest record ever, and then set another record for the shortest period to reach 3 trillion KRW in net assets within five months of listing. Currently, this ETF’s net assets stand at 3.5 trillion KRW, ranking third among 703 ETFs in total net assets. Individual net purchases over the year amounted to 65.4 billion KRW, and the average daily trading volume approaches 113,687 shares.

In particular, this ETF has very low price fluctuation, with the average daily bid-ask spread limited to one tick (5 KRW) due to stable liquidity provision (LP). It is highly rated for price stability and trading volume, which are key factors for parking-type products. Specifically, out of 249 trading days in the one-year listing period, the opening price was the same as the day’s low price on 174 days, and the bid-ask spread was one tick (5 KRW) on 75 days. Investors can buy at the opening price or sell based on the current price without burden, and in most cases, trade at a fair price.

Thus, the KODEX KOFR Interest Rate Active ETF, based on abundant bid-ask liquidity, provides the most suitable investment solution as a ‘parking-type ETF’ that allows investors to trade stable amounts at desired prices, avoiding market volatility.

Im Tae-hyuk, Executive Director of ETF Operations at Samsung Asset Management, said, “The KODEX KOFR Interest Rate Active ETF has maintained an unprecedented record in the domestic ETF industry as a ‘zero-loss-day ETF’ with no losses for one year since listing,” adding, “Moreover, it has established itself as a steady seller among interest rate ETFs by consistently outperforming the underlying index over the past year.”

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