Korea Investment Credit Focus ESG Fund, No.1 in 1-Year Returns Among Corporate Bond Public Funds

Operation Based on Proprietary Credit Investment Analysis System

Korea Investment Trust Management announced on the 14th that the Korea Investment Credit Focus ESG Fund recorded the highest one-year return among domestic corporate bond public funds.

According to F&Guide data from the previous day, the Korea Investment Credit Focus ESG Fund posted a one-year return of 8.51% (C-e class), the highest level among corporate bond public funds including exchange-traded funds (ETFs). The fund has shown stable performance with returns of 7.64% since the beginning of the year, 8.04% over the past three years, and 64.63% since its inception in November 2008. Notably, its one-year return ranks among the top in all bond-type public funds.

Launched in 2008, the Korea Investment Credit Focus ESG Fund is a flagship domestic bond fund managed by Korea Investment Trust Management for 15 years. It invests by selecting high-quality domestic credit bonds rated A or higher based on its proprietary credit investment analysis system. The asset selection process reflects factors such as individual companies' operating performance, cash flow, financial stability, and governance.

Various portfolio strategies are also employed to generate excess returns. Representative strategies include long-short spread strategies and relative value strategies across sectors, credit ratings, and individual securities. To manage liquidity, the fund maintains a certain proportion of government and public bonds alongside credit bonds. Additionally, it actively identifies and incorporates undervalued securities and conducts quarterly performance reviews to adjust credit risk. A key feature is the rapid reduction of holdings in assets expected to experience fundamental deterioration.

The fund’s portfolio, which includes more than 50 securities, is adjusted through collaboration between credit specialist portfolio managers and analysts. As a result, there has been no case of the credit rating of held assets falling below A grade during the 15 years since its inception.

The fund also stands out for maintaining a duration (weighted average maturity) of around two years. Maintaining a medium-short duration allows for higher expected returns compared to ultra-short-term bond funds and short-term financial products during future interest rate declines, while offering greater stability than medium- to long-term bond funds in unexpected interest rate hike scenarios.

Since 2020, the fund has incorporated ESG (Environmental, Social, and Governance) investment strategies to achieve sustainable returns. It reflects ESG ratings, a non-financial factor, alongside financial performance through its proprietary ESG scoring. This approach is based on the judgment that companies with lower ESG-related risks have higher potential for sustainable growth.

Park Bitnara, Head of FI Management Division 2 at Korea Investment Trust Management, explained, “As interest rate cuts are expected from mid-next year, those who have been investing in ultra-short-term bond products to avoid risks from rising interest rates should pay attention to bond products with longer durations. It is a good time to invest in medium-short-term bond products that have longer durations than ultra-short-term bonds, thus increasing expected returns when interest rates fall, while reducing volatility compared to long-term bond products.”

She added, “In the past, credit spreads narrowed (indicating reduced corporate credit risk) during interest rate cut phases caused by economic slowdowns. Going forward, we will continue selective investment in high-quality credit bonds while thoroughly monitoring whether fundamentals deteriorate due to tightening financial conditions.”

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