NH-Amundi launches long-term Korean Treasury ETF on KRX

Jan 17th, 2020 | By | Category: Fixed Income

ETF STRATEGY NEWS! ETF Strategy is delighted to announce the launch of ETF Strategy Hub (hub.etfstrategy.com), an on-demand repository of webcasts, videos, podcasts and white papers. Debuting with Special Series on Technology & Innovation in China and the Digital Economy.


NH-Amundi, a joint venture between Amundi and Korea-based NongHyup Financial Group, has launched the NH-Amundi Hanaro KAP Ultra Long-term KTB ETF (346000 KS) on Korea Exchange.

NH-Amundi launches long-term Korean Treasury ETF on KRX

The fund provides exposure to Korean Treasury bonds with remaining maturities of 10, 20, or 30 years.

The fund tracks the KAP Ultra-long KTB Index which provides exposure to long-term bonds issued by the Korean Treasury.

Korean Treasury bonds currently hold a credit rating of AA.

The index consists of the most recent, on-the-run issues of fixed-rate Korean Treasury bonds with maturities of 10, 20, or 30 years.

Each of the three maturity segments receives an equal weight in the index which, according to index provider Korea AP, targets an average duration of 15 years. The index is rebalanced on a monthly basis.

The ETF may appeal to investors seeking exposure to Korean Treasuries and who are willing to bear the risks involved with seeking higher yields at the far end of the yield curve – the yields on 10-year, 20-year, and 30-year Korean Treasuries are currently 1.74%, 1.73%, and 1.69%, respectively, compared to 1.33%, 1.42%, and 1.54% for 1-year, 3-year, and 5-year bonds (data as of 18 January 2020).

Longer-term bonds do, however, carry a risk that higher inflation could reduce the real value of payments. The increased duration exposure will also produce a greater negative impact on bond prices if overall interest rates rise.

The ETF comes with an expense ratio of 0.20%. Income is accumulated within the portfolio.

The fund is the first long-term Korean Treasury bond ETF in Korea to include securities extending beyond the 10-year maturity segment, though there are several ETFs that specifically target 10-year bonds. The cheapest of these is the KBSTAR KTB 10Y Futures ETF (295000 KS) which is linked to the F-LKTB Index and costs just 0.07%.

Tags: , , , , ,

Leave a Comment