Heungkuk Asset Management’s Mid-Term Government Bond Fund Joins the 1 Trillion Won Club

Heungkuk Asset Management announced on October 15 that its bond-type product, the ‘Heungkuk Mid-Term Government Bond Securities Investment Trust,’ has surpassed 1 trillion won in net assets.

Since expanding its sales target to individual investors in April, the fund has seen a steady inflow of capital and has now grown to become the third largest among domestic public offering mid- to long-term bond funds.

The core management strategy of the Heungkuk Mid-Term Government Bond Fund is to maintain an ‘average maturity (duration)’ of around 5 to 6 years. Duration refers to the average remaining maturity of the bonds held by the fund and indicates the fund’s sensitivity to interest rate changes.

By focusing on mid-term bonds, the fund seeks to earn higher interest income than short-term bonds, while also pursuing alpha returns through various additional income strategies. Thanks to its management strategy, the fund has ranked in the top 4% for one-year returns, top 2% for two-year returns, and top 1% for three-year returns among domestic public offering general bond-type funds of the same category.

The fund demonstrates its strengths in periods when the base interest rate is being lowered. The price of bonds moves inversely to market interest rates; when rates fall, the price of bonds issued at higher rates rises. By managing duration at around 5 to 6 years during a rate-cutting cycle, investors can expect not only interest income but also capital gains from rising bond prices.

Heungkuk Asset Management broadened its investor base by launching retail market sales in April, in response to growing demand from individual investors seeking returns higher than those of savings and deposit accounts.

Lee Seokhee, head of the Pension/WM Division at Heungkuk Asset Management, explained, “With the possibility of further base rate cuts coming into focus, interest in mid-term bond investments has increased,” adding, “The Heungkuk Mid-Term Government Bond Fund is well positioned to serve as a diversification tool for individual investors.”

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