Hold to maturity for expected annual returns in the 4% range... ACE corporate bond ETF to list

[Financial News] A maturity-based bond exchange-traded fund (ETF) is set to launch, allowing investors to diversify across highly rated corporate bonds and seek a certain level of interest income by holding them to maturity. Its distinguishing feature is that it diversifies credit risk compared with investing in individual corporate bonds while also allowing investors to set a clear maturity date.
Korea Investment Management Co., Ltd. said it will newly list the ACE 29-11 Corporate Bond (AA- or Higher) Active ETF on the 13th.
The product is a maturity-matched bond ETF with a fixed maturity. It will primarily hold bonds maturing in November 2029, and is scheduled to be delisted on November 27, 2029. Unlike conventional bond ETFs, it allows investors who hold it to maturity to seek returns based on the yield to maturity (YTM) at the time of purchase.
Its main investment targets are corporate bonds rated AA- or higher. The fund selects securities with stable credit ratings and high liquidity, and diversifies across issuers and industries to reduce credit risk compared with investing in individual bonds.
As of the 12th, the benchmark index had a duration of 2.87 years and a YTM of 4.39%. However, the ETF’s actual YTM may vary depending on interest-rate changes and the timing of investment.
The benchmark is the KIS Credit 2911 Maturity-Matched (AA- or Higher) Index, calculated by KIS Pricing. According to NICE Investors Service, the average cumulative default rate for AA-rated bonds was 0% from 1998 through 2025.
Nam Yong-su, head of the ETF Division at Korea Investment Management Co., Ltd., said, “A maturity-bond product can have an effect similar to investing in a single bond by holding bonds maturing at the date specified in the product name. If held to maturity, it can seek to return the principal and earn interest income; if interest rates fall, investors can also expect capital gains by selling before maturity.”
  
[email protected] Bae Hangeul Reporter