Mirae Asset Management Launches 1-Year CD Rate ETF... "It Will Be an ETF Innovation"

Mirae Asset Global Investments announced on the 1st that it held the ‘TIGER ETF Press Briefing’ at the Euljiro Mirae Asset Center One.

At the press briefing, Mirae Asset Global Investments introduced the ‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active (Synthetic) ETF,’ which will be newly launched on the 6th.

The ‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active ETF’ is an interest rate-type ETF that tracks the 1-year CD (Negotiable Certificate of Deposit) interest rate. It is expected to offer the highest interest income among interest rate-type ETFs currently listed in Korea. As of the 1st, the 1-year CD interest rate is 3.65%, which is on average 0.28 percentage points higher than the 91-day CD interest rate over the past three years, as it tracks a longer maturity rate. Compared to KOFR (Korea Overnight Financing Rate) during the same period, it is on average 0.48 percentage points higher.

Namho Kim, Head of the FICC ETF Management Division at Mirae Asset Global Investments, explained, “The ‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active ETF’ aims for higher returns than existing interest rate-type ETFs,” adding, “Since the daily interest of the 1-year CD rate is compounded daily, even investing for just one day can yield interest income equivalent to the 1-year rate.”

The ‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active ETF’ is expected to serve as a substitute for existing cash-equivalent products such as bank time deposits and parking accounts. Kim said, “Considering that bank 1-year deposit products generally pay only a portion of the agreed interest rate if withdrawn early before maturity, the highly liquid ‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active ETF’ can be an excellent alternative.”

It also has advantages compared to MMFs (Money Market Funds), which are typical short-term investment products. While MMFs include bonds and may incur capital losses when interest rates rise, the ‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active ETF’ provides interest income equivalent to the daily yield of the 1-year CD interest rate even if held for just one day, allowing for stable returns regardless of interest rate fluctuations.

The ‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active ETF’ will be listed on the Korea Exchange on the 6th with a scale of 230 billion KRW, marking the largest scale among interest rate-type ETFs ever listed domestically.

It is a bond-mixed type ETF that can be invested 100% through retirement pension accounts, and when traded using pension accounts, taxation is deferred until withdrawal, with tax credits also available.

Namgi Kim, Vice President of ETF Management at Mirae Asset Global Investments, said, “‘TIGER 1-Year Bank Negotiable Certificate of Deposit Active ETF’ is an ETF but can be called the ‘first listed deposit,’” adding, “Just as ETFs, which first appeared in 1993, brought innovation to fund investment, this ETF is expected to be an innovation unlike any existing ETF.”

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