Hantoo Asset Management Launches 'Short-Term Fund Management Solution' ACE CD Rate & Ultra-Short-Term Bond Active ETF

Korea Investment Trust Management announced on the 8th that it will list the parking-type exchange-traded fund (ETF) 'ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF' on the 9th of this month.

The ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF is Korea Investment Trust Management's first domestic parking-type ETF. A parking-type ETF is a product that applies interest rates from ultra-short-term bonds such as negotiable certificates of deposit (CD) or Korea Overnight Financing Rate (KOFR) on a pro-rata basis and compounds them. It is known as a product suitable for managing short-term funds or idle funds within pension accounts.

The ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF also includes bonds with a maturity of less than 3 months rated A- or higher, as well as corporate commercial papers (CP) and CDs rated A1 to A2. Through a hybrid strategy that diversifies holdings beyond CDs to include ultra-short-term bonds and CPs, it plans to pursue interest rates higher than CD rates. Currently, the 91-day CD rate is calculated at an annualized 3.58% (as of the 4th).

Considering the characteristics of parking-type ETF investors who want to manage short-term funds stably, most of the investment assets are composed of high-quality credit instruments. The duration is also managed with a target of 0.15 years. The inclusion of high-quality credit instruments aims to manage credit risk, and the short duration seeks to minimize the impact of interest rate volatility. The ETF management is handled by Kim Dong-joo, head of FI Management Division 1, who has over 18 years of fund management experience.

The recommended investment methods for the ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF are pension accounts and Individual Savings Accounts (ISA). The ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF can be invested up to 100% in defined contribution (DC) plans, individual retirement pensions (IRP), personal pensions, and ISAs. Since retirement pension accounts require at least 30% allocation to safe assets, investing idle funds within the account in the ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF allows investors to enjoy not only tax deduction benefits but also the long-term compounding effect of pro-rata calculated interest.

Kim Dong-joo, head of FI Management Division 1 at Korea Investment Trust Management, said, "Reflecting the recently increased investor demand, Korea Investment Trust Management is launching the domestic parking-type ETF, ACE CD Interest Rate & Ultra-Short-Term Bond Active ETF." He added, "We plan to select highly liquid credit bonds with short maturities and high yield to maturity (YTM) to pursue interest income higher than the 91-day CD rate."

He continued, "During the management process, we will continuously monitor rating stability through fundamental analysis of each security," and added, "We hope this will be an investment tool that helps amid various macro uncertainties such as inflation and economic recession."

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