Launch of ACE FTSE WGBI Korea ETF
Korea Investment Management has introduced the 'ACE FTSE WGBI Korea' ETF as a new investment option. This fund diversifies its portfolio across 63 Korean government bonds with issuance exceeding 1 trillion won, setting an estimated duration of about 10 years. Notably, Korean government bonds were included in the FTSE Russell World Government Bond Index (WGBI) last October, with phased inclusion starting this November, which has led to a marked increase in foreign investors' interest in Korean bonds.
The ETF's underlying index is the FTSE Korean Government Bond Index, delivering an enticing opportunity to invest in diverse-maturity Korean government bonds. This move is expected to accelerate the inflow of foreign capital, likely activating the Korean government bond market further. The growing interest from foreign investors is anticipated to enhance the market liquidity of Korean bonds.
Moreover, this trend contributes to the international recognition of the Korean bond market, potentially yielding long-term favorable impacts on the domestic economy. However, since this ETF is performance-based, it carries the risk of loss of principal investment, necessitating caution among prospective investors.
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