Interest Rate and Stock Market Volatility Rises... KB Asset Management Proposes 'Defense, Income, and Growth Strategies'

Managing Volatility with Ultra-Short-Term Bonds and Major US Indices
Seven Strategic Funds Tailored to Investment Objectives

On September 11, KB Asset Management presented investment strategies intended to address the volatility in interest rates and the stock market ahead of the September meeting of the US Federal Open Market Committee (FOMC). The company explained that rather than attempting to predict short-term market directions, it is necessary to assign different roles to each asset according to investment objectives—such as volatility management, securing income, and participating in long-term growth.

Recently, global financial markets have become increasingly uncertain due to a combination of factors, including US employment and inflation indicators, monetary policy directions, international oil prices, and geopolitical variables. As it is difficult to make definitive predictions about the direction of interest rates and stock markets, the need to construct a portfolio according to specific investment objectives and risk preferences—rather than making directional bets on a single asset—is growing.

In response, KB Asset Management identified three core strategies: managing volatility, securing income, and participating in growth, and recommended seven strategic funds that can be tailored to investors’ objectives and risk appetites.

For investors seeking to manage market volatility, the company suggested the “KB Tomorrow Dream Ultra-Short-Term Bond Fund,” the “KB US S&P500 Index 40,” and the “KB US NASDAQ100 Index 40.”

The “KB Tomorrow Dream Ultra-Short-Term Bond Fund” invests primarily in short-maturity Korean bonds and short-term financial instruments, thereby reducing sensitivity to interest rate fluctuations and allowing redemption the following business day (T+1). Both the “KB US S&P500 Index 40” and “KB US NASDAQ100 Index 40” are hybrid funds containing 40% of a major US equity index and 60% domestic short-term bonds. These funds offer investors opportunities for US market growth while lowering volatility compared to investments that are 100% equities.

The “KB RISE US High Dividend ETF Moa Dream” diversifies investments across US high-dividend ETFs to pursue both dividend income and medium- to long-term capital gains. The “KB New High Dividend” fund seeks dividend income and share price appreciation by including high-dividend stocks, companies with reduced dividends, and growth-value stocks.

For dividend strategies aimed at securing income, KB Asset Management recommends both the “KB RISE US High Dividend ETF Moa Dream” and “KB New High Dividend.” By investing in quality stocks with a focus on dividend income, these products can defend against downside risks and seek stable returns even during periods of market volatility.

For investors aiming for long-term growth opportunities, the company recommends asset allocation strategy funds such as the “KB All Asset AI Solution EMP” and the “KB Dynamic Qualified TDF 2040.” The “KB All Asset AI Solution EMP” adjusts allocations to assets—including equities, bonds, and commodity ETFs—by leveraging KB’s Anderson deep learning algorithm to respond to market changes. The “KB Dynamic Qualified TDF 2040” adjusts the proportion of risk assets in line with a lifecycle glide path, making it suitable for investors whose goal is long-term asset accumulation.

Junmo Jang, Head of Product Strategy at KB Asset Management, stated, “Especially when it is difficult to determine the direction of interest rates and the stock market, it is more important to clarify the role of each asset within the portfolio rather than trying to predict which asset will rise.” He added, “For short-term cash, ultra-short-term bonds should be used, for medium- and long-term growth exposure, hybrid bond strategies are appropriate, for stable growth, focus on high-dividend strategies, and for long-term investment, utilize AI EMP and target date funds (TDFs)—all in line with the respective investment objectives.”

He further commented, “When volatility increases, it is important to utilize a variety of solutions that align with the investor’s risk preferences and investment horizon, rather than betting on short-term directionality.”

This content was produced with the assistance of AI translation services.