Korea Investment Management Lists 'ACE 29-11 Corporate Bonds (AA- or Higher) Active' ETF

Korea Investment Management will launch a new target-maturity corporate bond exchange-traded fund (ETF) that matures in November 2029.

On October 13, Korea Investment Management announced that it would newly list the target-maturity bond ETF ACE 29-11 Corporate Bonds (AA- or Higher) Active on the Korea Exchange.

Unlike conventional bond ETFs, target-maturity bond ETFs have a set maturity date. Investors who hold them until maturity can realize the yield to maturity (YTM) expected at the time of purchase. One advantage is that investors can receive the expected return by holding the ETF until maturity, whether interest rates rise or fall. The liquidation date can be identified from the numbers in the product name. For the ACE 29-11 Corporate Bonds (AA- or Higher) Active ETF, liquidation is scheduled for November 2029, and its delisting date is November 27, 2029.

The ACE 29-11 Corporate Bonds (AA- or Higher) Active ETF primarily invests in bonds maturing in November 2029. It seeks to minimize market risk through the ETF's maturity date while generating stable interest income. Its benchmark is the KIS Credit 2911 Target-Maturity (AA- or Higher) Index, calculated and published by KIS Pricing. The ETF selectively invests mainly in high-quality corporate bonds rated AA- or higher. It plans to reduce credit risk compared with investing in individual bonds by diversifying its corporate bond holdings across issuers and industries. According to NICE Credit Rating, the average cumulative default rate for AA-rated bonds was 0% over the 27 years from 1998 to 2025, with no defaults recorded.

As of the previous trading day, October 12, the benchmark's duration was 2.87 years, and its YTM was approximately 4.39% per year. However, the actual YTM of the ACE 29-11 Corporate Bonds (AA- or Higher) Active ETF may vary depending on interest rate movements and the timing of investment. Investors should therefore check the YTM as of the previous trading day on the ACE ETF website before investing.

Investors can hold the ETF until maturity to receive the contracted principal and interest, or sell it before maturity during a period of falling interest rates to seek capital gains from rising bond prices. Conversely, even if interest rates rise, investors who hold the ETF until maturity can receive repayment of principal and interest as scheduled.

Nam Yongsoo, head of the ETF Division at Korea Investment Management, said, "Target-maturity products such as the ACE 29-11 Corporate Bonds (AA- or Higher) Active ETF can provide an effect similar to investing in a single bond by holding bonds that mature at the date indicated in the product name." He added, "They allow investors to pursue capital gains when interest rates fall and secure principal and interest by holding to maturity when rates rise, making them a useful option for investors seeking stable interest income."

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