Mirae Asset Management's 'TIGER US 30-Year Treasury Strip Active' Surpasses 500 Billion KRW in Net Assets

Mirae Asset Global Investments announced on the 1st that the ‘TIGER US 30-Year Treasury Strip Active (Synthetic H) ETF (458250)’ has surpassed 500 billion KRW in net assets.

According to the Korea Exchange, as of the closing price on July 31, the net assets of the ‘TIGER US 30-Year Treasury Strip Active (Synthetic H) ETF’ stand at 531.4 billion KRW. The net assets, which were 176.8 billion KRW at the end of last year, have increased approximately threefold in just over seven months.

The ‘TIGER US 30-Year Treasury Strip Active (Synthetic H) ETF’ is an ETF that includes strip bonds to maximize expected returns during interest rate declines. A strip refers to a bond whose principal and interest are separated, and the strategy invests only in the long-maturity principal to extend the bond’s average duration (weighted average maturity). While the duration of US 30-year Treasury ETFs listed domestically is around 18 to 19 years, the duration of 30-year strip bonds is about 28 to 29 years, approximately 50% longer. Since bond duration is proportional to price volatility, this ETF can expect higher returns compared to other US 30-year Treasury ETFs during periods of declining interest rates.

With rising expectations for a base rate cut, investor interest in the ‘TIGER US 30-Year Treasury Strip Active (Synthetic H) ETF’ is increasing. As of July 31, the cumulative net purchase volume by individuals since the beginning of the year reached 137.8 billion KRW. In particular, it appears that investors increased ahead of the July US Federal Open Market Committee (FOMC), anticipating signals of rate cuts from the Federal Reserve.

During the recent three-month period of declining 30-year US Treasury yields, the ‘TIGER US 30-Year Treasury Strip Active (Synthetic H) ETF’ recorded high returns. As of July 31, the ETF’s net asset value (NAV) return over the past three months was 8.23%, approximately 1.5 times higher than the average of 4.94% for 12 US 30-year Treasury ETFs listed domestically.

Kim Dae-ho, manager of the FICC ETF Management Division at Mirae Asset Global Investments, said, "With the US consumer price index approaching 2%, it seems that the Federal Reserve’s full-scale base rate cut cycle is imminent," adding, "Once a base rate cut occurs, market interest rates are expected to decline further due to increased expectations for additional cuts." He continued, "During periods of falling interest rates, investing in the ‘TIGER US 30-Year Treasury Strip (Synthetic H) ETF,’ which has the longest duration, can be expected to yield benefits."

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