KB Asset Management Launches Money Market ETF Targeting MMF Market

Concerns over liquidity crises have intensified following the bankruptcy of Silicon Valley Bank and the Credit Suisse incident, leading to a massive inflow of funds into the short-term money market fund (MMF) market. Since the beginning of the year, the net assets of the domestic public MMF market increased by 38 trillion KRW to reach 136 trillion KRW, while in the US, MMF net assets rose by 527.6 billion USD during the same period.

On the 8th, KB Asset Management announced that it will list the 'KBSTAR Money Market Active ETF' targeting the MMF market.

The ‘KBSTAR Money Market Active ETF’ is a bond-type ETF designed to allow both individual and corporate investors to invest in a portfolio equivalent to a corporate-type market value MMF.

The total expense ratio is 0.05% per annum, which is lower than that of MMFs, and the portfolio’s expected annual return is around 4.0%, relatively higher compared to MMFs.

It uses the ‘KIS Market Value MMF Index’ as a benchmark and primarily invests 70-80% in short-term bonds and CP (commercial paper) with maturities within three months, and 20-30% in cash equivalents such as time deposits with low price volatility.

The weighted average maturity of the portfolio is managed between 40 and 80 days depending on market conditions, and additional excess returns are pursued through asset purchases funded by selling repos (RP) when necessary.

Geum Jeong-seok, Head of ETF Marketing at KB Asset Management, explained, "The KBSTAR Money Market Active ETF is designed so that individual investors can enjoy the benefits of subscribing to corporate-type MMFs through ETFs," adding, "Due to the nature of market value evaluation, if short-term interest rates decline in the future, it could achieve higher excess returns compared to book value MMFs."

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