With bond yields holding at elevated levels, fixed-income exchange-traded funds that pursue interest income through maturity are drawing attention. Maturity-matched products, which invest in high-grade corporate debt for higher returns while allowing investors to withdraw funds when needed, have emerged as an investment alternative.
The TIGER 28-04 Corporate Bond (A+ or Higher) Active ETF posted a yield to maturity of 4.76% as of the previous day, according to Mirae Asset Global Investments on the 23rd. Yield to maturity is the annualized return expected if a bond is purchased at its current price and held until maturity. The fund's net asset value returns were 0.72% over the past month and 1.27% over three months.
The ETF invests in domestic corporate and financial bonds maturing in April 2028. Unlike conventional bond ETFs, it has a fixed termination date and is designed to recover principal and interest from its holdings at maturity before liquidating. Investors who hold until maturity can pursue returns close to the yield to maturity of the underlying bonds.
The fund is the only maturity-matched corporate bond ETF listed in South Korea that extends its investment universe down to A+ rated debt. Unlike rival products that invest mainly in bonds rated AA- or higher, the strategy incorporates A+ bonds to capture additional credit spread. Mirae Asset Global Investments screens bonds through credit analysis by a dedicated team that reviews financial soundness and repayment capacity.
The portfolio currently holds 30 bonds from 20 issuers, with a weighted average remaining maturity of about 1.7 years. By credit rating, AA- accounts for the largest share at 61.5%, followed by A+ at 29.7%, AA+ at 5.8% and AA at 3.0%. The structure allocates roughly 70% of total assets to bonds rated AA- or higher while seeking additional returns from A+ debt.
Large-scale inflows from institutional investors are cited as a factor supporting supply and demand in the corporate bond market. SK hynix has deployed 900 billion won of the 3 trillion won in bond investment funds it entrusted to six asset managers, and plans to commit the remainder over the next two weeks. Analysts say investment centered on credit bonds broadens the buying base and can ease upward pressure on yields.
"High-grade credit in the two- to three-year range continues to see investment demand, based on high carry returns and relatively short duration," said Kim Dong-myung, head of the bond ETF management division at Mirae Asset Global Investments. "The ability to sell at any time when funds are needed also makes the liquidity advantage attractive compared with promissory notes issued by securities firms or bank deposits."