Provided by KB Asset Management.

KB Asset Management announced on the 23rd that it will showcase the country's first exchange-traded fund (ETF) that invests in ultra-short-term 'AAA' rated bonds issued by special banks.

The 'RISE Short-term Special Bank Bond Active' ETF, which will be listed on the 24th, is a product that primarily invests in bonds issued by Korea's top three special banks: the Industrial Bank of Korea, the Export-Import Bank of Korea, and the Korea Small Business Bank.

The bonds are issued by special banks, of which the government is the largest shareholder. They are evaluated to have government bonds-level stability, as they can legally provide loss compensation and maintain the highest credit rating (AAA). Additionally, an average yield of 0.2 percentage points over government bonds can be expected.

Last year, the new issuance scale of special bank bonds was about 125 trillion won, accounting for approximately 58% of the entire special bond market. It is considered a competitive alternative to existing short-term financial products such as money market funds (MMF), certificates of deposit (CD), and Korea Overnight Risk-Free Rate (KOFR) due to its high liquidity and stability, according to KB Asset Management.

According to KB Asset Management, the risk-weighted assets (RWA) of the 'RISE Short-term Special Bank Bond Active' ETF are classified as 0%, meaning it does not affect capital soundness indicators (BIS, RBC, etc.) of financial institutions such as banks and insurance companies, making it efficient for managing reserve funds.

KB Asset Management has designed the product to be composed mainly of ultra-short-term bonds, allowing it to be utilized as a 'parking-type ETF' specialized for managing temporary standby funds or short-term liquidity. Its average duration is about 0.25 years, which minimizes the risk of evaluation losses due to interest rate fluctuations.