Kiwoom Asset Management Launches 'Heroes Money Market Active ETF'

Kiwoom Asset Management announced on the 26th that it will list the ‘Heroes Money Market Active’ exchange-traded fund (ETF), which invests in ultra-short-term bonds to pursue stable interest income, on the Korea Exchange on the 29th.

Heroes Money Market Active is an ultra-short-term bond ETF that invests in bonds with a remaining maturity of 3 months or less, certificates of deposit (CDs), commercial papers (CPs), and electronic short-term bonds, tracking the performance of the short-term financial market. It uses the ‘KIS-Kiwoom MMF Index,’ which reflects interest rate information from the short-term money market such as bond yields and CD yields with a remaining maturity of 3 months or less, CP yields with a remaining maturity of 15 days or less, and the Korea Overnight Financing Rate (KOFR), as its benchmark index (BM).

Ultra-short-term bond ETFs are also called ‘parking ETFs’ because they are suitable for managing idle funds when it is difficult to determine an investment direction due to market uncertainty. Regardless of the amount invested, investors can enjoy the effect of receiving one day’s worth of interest every day during the investment period. Currently, the base interest rate in Korea is 3.5%, the highest level since the 2008 financial crisis, and the relative advantage of short-term interest rates continues due to the inversion of long- and short-term interest rates amid economic concerns.

Kiwoom Asset Management explains that by utilizing ultra-short-term bonds with high interest rates and low price volatility, it is possible to minimize the possibility of capital loss while maximizing interest income.

Heroes Money Market Active is an active ETF that pursues performance exceeding the benchmark index by adding discretionary management strategies within the range of maintaining a correlation coefficient of 0.7 or higher with the benchmark index. It aims for an annualized maturity expected yield (YTM) of around 4.1%.

Heroes Money Market Active is a product concept that turns money market funds (MMFs), which are mainly used by individuals, corporations, and institutional investors for short-term investments of idle funds, into an ETF. Legally classified as a bond-type ETF, it is free from various regulations applied to MMFs, making it advantageous to pursue returns higher than those of MMFs. Since ETFs are listed on the Korea Exchange, buying and selling are convenient. Another strength is that the asset composition details (PDF) are disclosed daily, allowing transparent confirmation of investment item information. The total annual fee for Heroes Money Market Active is 0.05%, which is half the average fee rate of all domestic MMFs (0.1%).

Jung Sung-in, head of the ETF Marketing Division at Kiwoom Asset Management, said, "Although a base rate cut is expected within the year, it is difficult to specify the exact timing and magnitude, and the direction of the stock market is also uncertain, so it is good to keep the investment horizon short in the current situation." He added, "Ultra-short-term bond ETFs pursue stable interest income from short-term interest rates during the investment period while maintaining liquidity that allows funds to be withdrawn at any time," introducing it as "a good alternative for investing idle funds.”

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