Shinhan Asset Management's 'SOL Ultra-Short-Term Bond Active' Surpasses 350 Billion KRW

Shinhan Asset Management announced on the 12th that the net assets of the ‘SOL Ultra-Short-Term Bond Active Exchange-Traded Fund (ETF)’ have surpassed 350 billion KRW. Due to increased uncertainty over global interest rate cuts, investor demand to manage liquidity funds stably has surged, resulting in an inflow of over 260 billion KRW this year alone. The net assets, which were 87.8 billion KRW at the end of last year, have increased more than fourfold.

The ‘SOL Ultra-Short-Term Bond Active ETF’ is composed of a portfolio primarily consisting of high-quality short-term financial products such as ultra-short-term bonds with a remaining maturity of less than three months (credit rating A- or higher) and commercial paper (A2- rating or higher). It is managed stably by reducing volatility caused by interest rate fluctuations and seeks excess returns by securing additional interest income through discovering undervalued high-quality securities.

Through active management, the portfolio is expected to yield a relatively superior annual return of 4.00%, compared to CD 1-year rate (3.58%), CD 91-day rate (3.58%), KOFR rate (3.51%), new-type MMF (3.75%), and fixed deposits (3.05%).

Kim Jeong-hyun, Head of the ETF Business Division at Shinhan Asset Management, said, “With the US March CPI (Consumer Price Index) exceeding expectations and diminishing hopes for interest rate cuts, demand from investors seeking to manage short-term liquidity is increasing amid prolonged high interest rates and expanding uncertainties in domestic and international financial markets. The SOL Ultra-Short-Term Bond Active ETF consistently maintains one of the top YTMs (Yield to Maturity) among parking-type ETFs, leading to continuous inflows mainly from individual investors and bank customers.”

The CPI has exceeded market forecasts for three consecutive months, and US Federal Reserve officials have expressed concerns about the pace of inflation slowdown, making the timing of the first interest rate cut uncertain. As US Treasury yields surge and the three major New York stock indices decline, financial market volatility is gradually increasing, so investor interest in parking-type ETFs as a safe haven in the stock market is expected to remain steady.

Unlike most parking-type ETFs that track KOFR (risk-free benchmark rate) or CD (Certificate of Deposit) rates and are classified as risky assets, the SOL Ultra-Short-Term Bond Active ETF is classified as a safe asset, allowing 100% investment of accumulated funds in retirement pension (DC/IRP) accounts. Since it operates with a structure where interest accrues daily, it is highly useful not only for pension accounts but also for ISA (Individual Savings Account), where tax benefits are expected to expand.

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