Korea Investment Management Launches Secured Overnight Financing Rate ETF Tracking Solactive Index
The world has been coping with an environment of rising inflation, higher interest rates, and geopolitical instabilities, pressuring both stock and bond markets. As a result, investors increasingly feel the need to allocate their resources more defensively, causing them to de-risk and allocate higher portions of their capital towards cash. Correspondingly, the demand for investment vehicles that provide adequate yields in today’s higher interest rate environment has been rising. Against this backdrop, Korea Investment Management has expanded its partnership with Solactive to launch the new KIM ACE USD SOFR ETF Synth, that tracks the Solactive SOFR Daily Total Return Index.
The product is an accumulating daily return strategy that aims to provide yields in line with the SOFR rate. Moreover, the ETF wrapper can be an attractive tool for financial market participants, allowing investors to access the yield efficiently and flexibly. SOFR itself is based on transactions in the US Treasury repurchase market and acts as a benchmark interest rate for USD denominated derivatives and loans. As such, it is replacing the London Interbank Offered Rate (LIBOR), and is considered preferable to LIBOR since it is based on data from observable transactions rather than on estimated borrowing rates.
The KIM ACE USD SOFR ETF Synth has been listed on the Korean Stock Exchange under the code 456880.KS.
Timo Pfeiffer, Chief Markets Officer at Solactive, says: “For institutional and individual investors alike, this new product can be a powerful instrument for facilitating their tactical asset allocation decisions. Additionally, with interest rates being at highs not seen for a very long time, it can also be seen simply as a safe-haven investment with a solid return. With this launch, we are once more pleased to expand our activities in the Korean market with KIM, further demonstrating our commitment to continuously provide the best solutions for our partners, and ultimately investors.”