TIGER CD 1-Year Rate Active ETF Surpasses 1.5 Trillion Won in Net Assets

Mirae Asset Global Investments announced on November 28 that the "TIGER CD 1-Year Rate Active (Synthetic) ETF" has surpassed 1.5 trillion won in net assets, boosted by the recent rise in 1-year Certificate of Deposit (CD) rates.

According to the Korea Exchange, as of the close on the 27th, the net assets of the TIGER CD 1-Year Rate Active (Synthetic) ETF stood at 1.5309 trillion won. Approximately 500 billion won of new funds flowed in this month alone. Recently, the 1-year CD rate has surged sharply. As of the 27th, the 1-year CD rate was 2.93%, a significant increase from 2.55% at the end of October.

The TIGER CD 1-Year Rate Active ETF is the first interest rate ETF in Korea to track the 1-year Certificate of Deposit (CD) rate. The ETF calculates the 1-year CD rate on a daily basis and compounds it, allowing investors to earn the daily interest rate even if they invest for just one day, regardless of the investment period or conditions.

Recently, the TIGER CD 1-Year Rate Active ETF has attracted attention as a "high-interest parking-type ETF" amid the sharp rise in 1-year CD rates. Generally, longer maturities offer higher rates, but until early this month, there was an unusual inversion where the 91-day CD rate was higher than the 1-year CD rate. As expectations for rate cuts have diminished, this inversion has now normalized, and short-term rates-especially the 1-year CD rate-are rising rapidly. As of the 27th, the 1-year CD rate remains 0.13 percentage points higher than the 91-day CD rate (2.80%), maintaining a significant rate differential.

Unlike deposits, which may have restrictions such as paying only a portion of the agreed interest rate upon early termination, this ETF offers excellent liquidity. Investors can receive the accumulated 1-year CD rate for the exact duration of their investment without any maturity or condition restrictions, making it suitable for managing short-term idle funds or cash awaiting investment.

Unlike Money Market Funds (MMFs), which directly hold bonds, this ETF is structured to include swaps based on a benchmark index, eliminating concerns about capital losses when rates rise. The total expense ratio is 0.0098% per year, the lowest among similar interest rate ETFs listed in Korea. Given the nature of interest rate ETFs, where fees and other costs significantly impact returns, this is expected to contribute to higher net returns for investors.

Currently, the TIGER CD 1-Year Rate Active ETF is also considered an efficient investment option because there is no concern about ex-dividend dates. Under the income tax law implemented this year, bond ETFs are required to distribute at least once annually. The TIGER bond ETFs, including the TIGER CD 1-Year Rate Active ETF, have already completed their annual distributions this month, so there will be no ex-dividend events for the next year.

Kim Dongmyung, Head of Bond ETF Management at Mirae Asset Global Investments, stated, "'TIGER CD 1-Year Rate Active (Synthetic) ETF' has reduced concerns about net asset value declines or tax collection due to monthly distributions by paying distributions on an annual basis." He added, "To minimize investor confusion regarding bond ETF distributions, we have provided guidance through the TIGER ETF website and other channels since September."

He continued, "In a market environment with unstable interest rates, now is a good time for investors seeking high-interest parking-type products to consider the TIGER CD 1-Year Rate Active (Synthetic) ETF, as it allows them to earn relatively high rates without concerns about investment period, conditions, or early termination."

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