Uri Asset Management "Korea Successfully Included in WGBI... Expecting Benefits for 'Daehanminguk Gukgochae ETF'"

by Ryu Hyunseok

Published 10 Oct.2024 16:10(KST)

Woori Asset Management announced on the 10th that the inclusion of South Korea in the World Government Bond Index (WGBI), one of the world's top three bond indices, is expected to benefit the Korea Treasury Bond Exchange-Traded Fund (ETF).

Global index provider FTSE Russell, part of the UK Financial Times Stock Exchange, announced on the 8th local time that South Korea will be added to the WGBI starting November 2025.

Woori Asset Management's ‘WON Korea Treasury Bond Active ETF’ (hereinafter Treasury Bond ETF) is an ETF that includes all risk-free rated treasury bonds with a remaining maturity exceeding three months. The underlying index of this ETF is the 'KAP Korea Treasury Bond Total Return Index' by Korea Asset Pricing, which represents the flow of Korean treasury bonds as it has a duration similar to the average duration across all segments of treasury bonds.

Woori Asset Management launched this ETF in 2022 in anticipation of Korea's inclusion in the WGBI. Unlike existing ETFs that include treasury bonds from specific segments, this ETF includes treasury bonds across all segments, increasing correlation with the WGBI while minimizing credit risk.

According to Woori Asset Management, this approach enhances diversification effects, allowing for stable long-term performance. Kim Dong-hwan, head of the bond management division at Woori Asset Management, stated, “With this inclusion, the Ministry of Economy and Finance and overseas financial institutions expect 70 trillion to 90 trillion KRW of foreign capital to flow into the domestic bond market starting next year,” adding, “Woori Asset Management’s Treasury Bond ETF is expected to benefit from both the interest rate cuts and improved supply-demand conditions.”