Hantoo Asset Management to Launch Korea's First 'Maturity Auto-Renewal Bond ETF' This Month

The Nation's First Maturity Auto-Renewal Bond ETF
Enhancing Investment Continuity with Auto Reinvestment

Korea Investment Trust Management announced on the 4th that it plans to launch the country's first maturity auto-extension bond-type exchange-traded fund (ETF) this month, named 'ACE November Maturity Auto-Extension Corporate Bond AA-Above Active.'

The maturity auto-extension bond-type ETF primarily includes bonds with a specific maturity month in its portfolio, and when the maturity date of the included assets approaches, the portfolio is automatically switched to bonds maturing the following year. Unlike maturity bond-type ETFs listed on the Korea Exchange, this allows for continuity of investment.

For the 'ACE November Maturity Auto-Extension Corporate Bond AA-Above Active' ETF introduced by Korea Investment Trust Management, bonds maturing in November of next year will be included at the time of launch, and when the maturity date arrives, bonds maturing in November of the following year will be newly included. Portfolio changes will be made within 5 business days based on the end of November each year. Dividends will be paid in early December after the last business day of November (payment reference date). The benchmark index is the 'KIS November Maturity Auto-Extension Corporate Bond (AA-Above) Total Return Index,' calculated and announced by KIS Asset Evaluation. Among the components of the KIS Composite Bond Index, bonds maturing between October and December each year ▶with a credit rating of AA- or higher ▶and an issuance amount of 50 billion KRW or more, including special bonds·bank bonds·other financial bonds·and corporate bonds are grouped to calculate the index.

The portfolio also includes special bonds·bank bonds·other financial bonds·and corporate bonds with a credit rating of AA- or higher. The investment focuses on high-quality and liquid bonds issued by public corporations and others to reduce credit risk while enhancing interest rate attractiveness. According to NICE Credit Rating, the average cumulative default rate of AA-rated bonds has been 0% from 1998 to the present, with no default cases.

Jo Ik-hwan, Senior Manager of FI Management Division 1 at Korea Investment Trust Management, said, "When selecting securities to include in the ACE November Maturity Auto-Extension Corporate Bond AA-Above Active ETF portfolio, we plan to include securities with relatively higher yield to maturity (YTM) within the same rating or securities with relatively higher credit ratings at similar interest rate levels to enhance profitability and stability." He added, "In addition, we will focus on including securities with maturity dates earlier than the end of November to minimize costs related to sales."

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