Short-term funds flocked to volatile markets, pushing ACE Money Market Active ETF's net assets above KRW 1 trillion

[Financial News] As volatility in stocks and interest rates rises, demand for short-term money market exchange-traded funds (ETFs) is growing among investors seeking to manage idle funds steadily. The net assets of Korea Investment Management's ACE Money Market Active ETF have also surpassed KRW 1 trillion.
Korea Investment Management announced on the 28th that the net assets of its ACE Money Market Active ETF had surpassed KRW 1 trillion.
According to the Korea Exchange (KRX), net assets stood at KRW 1.1849 trillion as of the 23rd, reaching the KRW 1 trillion level about two years after the ETF was listed in July 2024.
Fund inflows have continued since the beginning of the year. The product has attracted KRW 701.8 billion since the start of the year, exceeding the average inflow of KRW 258.6 billion recorded by 13 domestic bond-type money market active ETFs listed in Korea. Inflows totaled KRW 297.7 billion in the past month alone.
The ACE Money Market Active ETF invests in bonds with remaining maturities of three months or less and credit ratings of AA or higher, as well as commercial paper (CP), certificates of deposit (CD), and other instruments. It calculates the returns generated by ultra-short-term financial products such as CDs and the Korea Overnight Financing Repo Rate (KOFR) on a daily basis and compounds them. This structure allows investors to use the ETF to manage short-term funds or idle assets in retirement accounts.
The ETF has also delivered returns above short-term interest rates. As of the 23rd, its annualized yield to maturity (YTM) was 3.74%, exceeding the 3.21% rate for 91-day CDs and the 3.57% average for 13 domestic bond-type money market active ETFs. YTM is the weighted average annualized return an investor can expect, assuming the bonds held by the ETF are kept until maturity.
Cho Ik-hwan, head of FI Management Division 1 at Korea Investment Management, said, "The ACE Money Market Active ETF has a duration of about 0.13 years, making it less sensitive to interest-rate fluctuations." He added, "When the risks from interest-rate and stock-price volatility are high, investors can add short-term money market products to their portfolios as a strategy to reduce volatility."
[email protected] Bae Han-geul Reporter