KB Asset Management Launches Two ETFs Investing in US Dollar Assets

On the 9th, KB Asset Management will newly list two exchange-traded funds (ETFs) targeting the US dollar (USD) market: KBSTAR KP Dollar Bond Active ETF and KBSTAR US Dollar Futures Inverse ETF.

First, the 'KBSTAR KP Dollar Bond Active ETF' is an ETF that invests in KP bonds. KP bonds (Korean Paper) are foreign currency-denominated bonds issued by domestic institutions in overseas markets. Currently, they offer relatively higher interest rates compared to won-denominated bonds, allowing investors to enjoy the effect of investing in familiar domestic companies at relatively high interest rates.

In fact, the maturity yield of the KIS KP Dollar Bond Index, which this ETF tracks, is 5.46%, providing an interest rate more than 1.3 percentage points higher than the 4.11% yield when investing in the same issues as won-denominated bonds. (As of the end of August 2023, based on KIS Asset Evaluation)

Also, about 60% of the investment is allocated to special bank bonds and public corporation bonds, which are expected to receive government support in emergencies, and the remaining 40% consists of corporate bonds rated AA- or higher, resulting in relatively stable performance during crisis periods such as the COVID-19 pandemic.

Since the fund’s performance is linked to the movement of the US dollar, additional gains from exchange rate profits can be pursued during periods of dollar strength.

The 'KBSTAR US Dollar Futures Inverse ETF,' also listed on the same day, is a product that inversely (-1x) tracks the return of the US Dollar Futures Index calculated by the Korea Exchange. It includes the most recent monthly contracts listed on the US dollar futures market as its components.

Investing in the 'KBSTAR US Dollar Futures Inverse ETF' allows investors to hedge portfolio risks associated with holding US dollars during periods of dollar weakness. The total expense ratio is approximately 0.05% per year, the lowest among similar domestic products.

Geum Jeong-seop, Head of ETF Marketing at KB Asset Management, explained, “By utilizing these two newly launched products, investors can easily invest in the movements of the dollar-won exchange rate, which is an essential part of asset allocation portfolios. The KBSTAR KP Dollar Bond Active ETF offers the effect of investing simultaneously in high interest rates and the US dollar by investing in dollar bonds issued by major domestic blue-chip companies, while the KBSTAR US Dollar Futures Inverse ETF will serve as an efficient dollar hedge tool for institutional investors holding US dollars.”

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