Hantoo Asset Management, Korea's First 'Maturity Auto-Renewal Bond ETF' Listed

Korea Investment Trust Management announced on the 18th that it plans to list the country's first maturity auto-extension bond-type exchange-traded fund (ETF), 'ACE November Maturity Auto-Extension Corporate Bond AA-Above Active,' on the 19th.

The ACE November Maturity Auto-Extension Corporate Bond AA-Above Active ETF primarily invests in bonds maturing every November and automatically replaces the portfolio with bonds maturing the following year as the maturity date of the invested assets approaches.

Unlike maturity bond-type ETFs currently listed on the Korea Exchange, this product features the ability to maintain investment continuity. By reducing market risk until maturity before rollover rebalancing (maturity extension readjustment), it aims to pursue stable interest income.

Portfolio changes for this ETF occur within five business days before or after the last business day of November each year, and dividends are paid on the first business day of December based on the end of November.

The ACE November Maturity Auto-Extension Corporate Bond AA-Above Active ETF uses the 'KIS November Maturity Auto-Extension Corporate Bond (AA-Above) Total Return Index' as its benchmark index.

This index is calculated by constructing an investment portfolio (basket) from KIS Composite Bond Index components that mature between October and December each year, consisting of special bonds, bank bonds, other financial bonds, and corporate bonds with a credit rating of AA- or higher and an issuance balance of 50 billion KRW or more.

The ETF's portfolio also includes special bonds, bank bonds, other financial bonds, and corporate bonds with a credit rating of AA- or higher.

Even within the same rating, the ETF focuses on high-quality and liquid bonds to reduce credit risk while enhancing interest rate attractiveness. According to NICE Credit Rating, the average cumulative default rate for AA-rated bonds has been 0% from 1998 to the present, with no defaults recorded.

The ETF is managed by Senior Manager Jo Ik-hwan of Korea Investment Trust Management's FI Management Division 1. Manager Jo is an expert with a total of 16 years of bond-related experience, including three years in fund risk management.

He has managed bond-type funds and retirement pension assets for over 10 years. Currently, Manager Jo manages bond-type active ETFs with a combined net asset value of approximately 1.04 trillion KRW.

Nam Yong-su, Head of the ETF Management Division at Korea Investment Trust Management, stated, “The ACE November Maturity Auto-Extension Corporate Bond AA-Above Active ETF differs from existing maturity bond-type ETFs in that it is not liquidated at maturity but automatically reinvested in the same manner. While it offers relatively predictable returns like maturity bond-type ETFs, it eliminates the hassle of switching to another maturity bond-type ETF after maturity.”

He added, “The ACE November Maturity Auto-Extension Corporate Bond AA-Above Active ETF will be a good solution for investors with a stable investment preference or those approaching pension withdrawal periods.”

Meanwhile, the ACE November Maturity Auto-Extension Corporate Bond AA-Above Active ETF is a performance-distributing product, and principal loss may occur depending on management results. The yield to maturity (YTM) may vary depending on the investment timing, so caution is advised when investing. Additionally, the past default rates of bonds mentioned in the text may not necessarily apply in the future.

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