Hantoo Asset Management's Korea Investment US Long-Term Treasury Bond Fund Series Surpasses 200 Billion KRW in Retail Investor Funds

Korea Investment Trust Management announced on the 12th that individual investor funds flowing into the ‘Korea Investment US Long-Term Treasury Bond Fund’ series have surpassed 200 billion KRW. The fund series consists of currency-exposed type (UH), currency-hedged type (H), and US dollar type (USD).

According to the Korea Financial Investment Association, individual investor funds flowing into the Korea Investment US Long-Term Treasury Bond Fund series were recorded at 202.8 billion KRW as of the 7th of this month, surpassing 200 billion KRW for the first time. On the 9th of this month, it reached 210.9 billion KRW. This amount was accumulated in about four months since the fund sales began in April this year. Thanks to being chosen by individual investors, the fund series has grown rapidly to become the largest domestic public bond fund series excluding exchange-traded funds (ETFs) among US bond public funds.

The inflow of individual funds is analyzed to be due to the Federal Reserve (Fed) mentioning the possibility of a rate cut at the September Federal Open Market Committee (FOMC) meeting. The economic conditions for a rate cut are currently considered to be in place. Both the US Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) price indices, which the Fed regards as major inflation indicators, rose by 3.0% and 2.5% respectively compared to the same period last year, showing a slowdown in the upward trend.

The Korea Investment US Long-Term Treasury Bond Fund series is characterized by investing exclusively in US long-term treasury bonds, unlike previously established US long-term bond-related funds. It is the first public fund to invest solely in US long-term treasury bonds without including risky assets such as corporate bonds. The fund series invests in US long-term treasury bonds with a remaining maturity of 10 years or more, guaranteed by the US government, aiming to seek profits when the US benchmark interest rate declines.

The 3-month average return of the Korea Investment US Long-Term Treasury Bond Fund series was 6.32%, exceeding the average return of 4.14% for the comparison group (US bond public funds) during the same period. The average return since the series’ inception is 4.96%.

Ji-won Ji, Senior Manager of the Global Strategy Management Department at Korea Investment Trust Management, said, “A consensus is forming that the Fed will cut the benchmark interest rate in the near future due to the slowdown in inflation and the continued weak employment trend. From now on, the speed and extent of the rate cut will likely depend on the direction of the labor market.”

He added, “Now, ahead of the Fed’s full-scale rate cut cycle, it is considered an opportune time to pursue bond interest income and capital gains through investment in the Korea Investment US Long-Term Treasury Bond Fund series.”

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