Money Pours Into Short-Term Fund ETFs... SOL Ultra-Short Bond Active ETF Surpasses KRW 1 Trillion in Net Assets

[Financial News] As stock-market and interest-rate volatility continues, demand is growing for short-term fund exchange-traded funds (ETFs) as a stable way to manage surplus funds. The net assets of Shinhan Asset Management's SOL Ultra-Short Bond Active ETF have also surpassed KRW 1 trillion.
Shinhan Asset Management announced on the 22nd that the net assets of its SOL Ultra-Short Bond Active ETF had surpassed KRW 1 trillion.
Funds have recently continued to flow into short-term fund ETFs overall. About KRW 1.4 trillion entered the 10 short-term fund ETFs with the largest net inflows over the past week. The increase is attributed to growing demand from individual investors and the banking sector seeking to manage liquid funds.
The SOL Ultra-Short Bond Active ETF primarily invests in high-quality short-term financial instruments, including bonds rated A- or higher with remaining maturities of three months or less and commercial paper rated A2- or higher. Because the bonds have short remaining maturities, the product limits price volatility caused by interest-rate fluctuations while seeking additional interest income by identifying undervalued, high-quality securities.
With the Korea Overnight Financing Repo Rate (KOFR) and 91-day certificate of deposit (CD) rates recently standing at 3.1% to 3.2%, the product posted an annualized return of 3.41% over the past three months.
Another feature is that the ETF can be used in retirement pension accounts. Unlike many short-term fund ETFs that track KOFR or CD rates and are classified as risky assets, the SOL Ultra-Short Bond Active ETF is classified as a safe asset. This allows investors to invest up to 100% of their accumulated funds through defined-contribution (DC) and individual retirement pension (IRP) accounts. It can also be held in individual savings accounts (ISAs).
Heo Ik-seo, head of the Bond ETF Management Team at Shinhan Asset Management, said, "As domestic and overseas stock markets have recently fluctuated without a clear direction and interest-rate volatility has increased, demand for short-term fund ETFs as a place to park surplus funds is rising again. Their short remaining maturities mean relatively less concern about price volatility, while the ability to trade them at any time on the exchange is another strength."   

[email protected] Bae Han-geul Reporter