Amid the increased volatility in the domestic stock market, the ACE KRX Gold Spot ETF and the ACE CD Interest Rate & Short-Term Bond Active ETF are gaining popularity.
Korea Investment Trust Management stated on the 8th that individual investors have continued to make net purchases of two ACE listed index funds (ETFs).
The ACE KRX Gold Spot ETF has recorded consecutive individual net purchases for 34 trading days from June 21 to July 7, while the ACE CD Interest Rate & Short-Term Bond Active ETF has seen individual net purchases for 22 consecutive trading days since its listing on the 9th of last month. The total individual investor funds inflow during the continuous net purchase period amounted to 30.2 billion KRW for the ACE KRX Gold Spot ETF and 27.6 billion KRW for the ACE CD Interest Rate & Short-Term Bond Active ETF.
In particular, the ACE KRX Gold Spot ETF recorded 5.4 billion KRW in individual net purchases on the day when sidecars and circuit breakers were triggered in the domestic stock market for the first time in 4 years and 5 months on the 5th. This amount ranked 8th in terms of daily individual net purchases among the 873 ETFs listed on the stock market.
The ACE KRX Gold Spot ETF is characterized by the inclusion of gold, which has a low correlation with stocks. Gold is a typical safe haven asset, and its demand tends to increase when market volatility rises. The ACE KRX Gold Spot ETF has also seen continued fund inflows and surpassed a net asset value of 300 billion KRW as of the 5th, reaching 309.4 billion KRW on the previous day.
The ACE CD Interest Rate & Short-Term Bond Active ETF is also experiencing rapid growth. With sustained demand for investment to hedge against increased market volatility, it recorded a net asset value of approximately 150 billion KRW within a month of its listing. As a parking product, the ACE CD Interest Rate & Short-Term Bond Active ETF aims for higher returns than CD rates. In fact, the yield to maturity (YTM) of this product is 3.66% as of the previous day, higher than the CD rate for the 91st month (3.48%).
One common feature of the ACE KRX Gold Spot ETF and ACE CD Interest Rate & Short-Term Bond Active ETF is that investment is possible within pension accounts. With the ACE KRX Gold Spot ETF, investments up to 70% are allowed in retirement pension accounts due to investment in gold bullion, while the ACE CD Interest Rate & Short-Term Bond Active ETF can hold up to 100%.
Kim Seung-hyun, in charge of ETF marketing at Korea Investment Trust Management, recommended taking an interest in products such as the ACE KRX Gold Spot ETF and ACE CD Interest Rate & Short-Term Bond Active ETF from an asset allocation perspective during periods of increased market volatility. He added that utilizing ETF investments through Defined Contribution (DC) type retirement pensions, Individual Retirement Pensions (IRP), and Individual Comprehensive Asset Management Accounts (ISA) can also enjoy tax deduction benefits.
All ACE ETF products are performance dividend type products, and capital losses may occur depending on the operating results. YTM does not represent a guaranteed return, so the YTM at the time of investment may not be realized depending on market conditions.