Big money pours in, drawn by high yields... KODEX US 10-Year Treasury Active tops 200 billion won in net assets

[Financial News] With US 10-year Treasury yields holding at elevated levels of around 5% a year, funds are flowing into exchange-traded funds (ETFs) that invest in US Treasuries.
According to the Korea Exchange on the 2nd, Samsung Asset Management’s ‘KODEX US 10-Year Treasury Active (H)’ ETF surpassed 200 billion won in net assets on the 28th of last month.
This is seen as reflecting growing investor demand for high interest income and capital gains from a future decline in interest rates. US 10-year Treasury yields topped 5% a year last September, then surged to the 5.3% range early last month. They have since fallen but remained at around 4.93% as of the end of last month. Since bond prices move inversely to yields, investors may also expect capital gains if interest rates fall in the future.
‘KODEX US 10-Year Treasury Active (H)’ is a product that invests in US Treasury ETFs linked to cash US Treasuries with 7–10 years remaining to maturity. Its duration, which indicates how sensitive bond prices are to changes in interest rates, is about 6.8 years.
Another feature is that it is a mid-month dividend product that pays distributions on the 15th of each month. It aims for an annual distribution yield of at least 4%, and can be used alongside ETFs that pay distributions at the end of the month to secure cash flow twice a month.
It also uses a currency-hedging strategy to reduce the impact of fluctuations in the won-dollar exchange rate. Investors can put up to 100% of their account balance into it through personal pension and retirement pension (DC·IRP) accounts.
Lim Tae-hyeok, a vice president at Samsung Asset Management, said, “Funds from investors seeking to secure the benefits of US 10-year Treasury yields at around 5% a year continue to flow in,” adding, “It will be the most efficient and stable investment vehicle for investors seeking to capitalize on the current market environment, in which medium- and long-term interest rates are elevated.”

[email protected] Seo Min-ji Reporter