Mirae Asset’s target-maturity TIGER ETFs top $751 million

Mirae Asset Global Investments Co.’s target maturity TIGER ETF [Photo provided by Mirae Asset]

Four exchange traded funds (ETFs) with target maturity managed by Mirae Asset Global Investments Co. have exceeded 1 trillion won ($751 million) in combined net assets, on the back of the continuing popularity of corporate bonds, said the asset manager on Thursday.

According to the Korea Exchange, net assets of the TIGER 24-10 Term Corporate Bonds Active ETF stood at 528.8 billion won at the close on Wednesday. Focusing on A+ and above corporate bonds that mature in October 2024, the ETF has been one of the most popular among the four target maturity ETFs, seeing strong long positions since its listing in November thanks to high interest rates for corporate bonds.

Popularity of corporate bonds led to growth in the company’s corporate bond ETFs with different maturities. The TIGER 25-10 Corporate Bond Active ETF and its TIGER 24-04 Corporate Bond Active ETF grew to 201.6 billion won and 130.6 billion won in net assets, respectively. The TIGER 23-12 Government Bond Active ETF also saw a steady rise, posting 163.9 billion won in net assets.

A target maturity ETF is a financial instrument that provides estimated returns at maturity, regardless of changes in market interest rates. It allows investors to add additional long positions before the target maturity date. If market interest rates rise after the initial listing, investors can enjoy higher yields to maturity. Even if interest rates fall after listing, investors can switch to short positions halfway to generate returns.

First introduced in the Korean market last year, target maturity ETFs are rapidly growing in popularity on the back of growing interest in bonds in general. The likely termination of the benchmark rate is also encouraging investment in long-term bond ETFs.

The TIGER 25-10 Corporate Bond Active ETF attracted the largest investment among 12 target maturity ETFs listed on the local market during the first 10 days from its listing on March 23. Retail investors bought a net 7.3 billion won of the ETF solely on the day of listing, topping the net purchase volume by individual investors this year on listing day.

“We expect target maturity ETFs to grow further with their various advantages compared to traditional bonds, in terms of liquidity, fees and diversification benefits,” said Jeong Seung-ho, a manager in the ETF management division at Mirae Asset Global Investments. “We’ll continue to add more products with various target maturities to our TIGER ETF lineup to give our investors more options.”

Mirae Asset Global Investments manages 34 trillion won in the domestic ETF market and 120 trillion won in global ETF markets. Its U.S. ETF subsidiary, Global X, has seen almost six-fold growth in assets under management since its acquisition in February 2018.

In June, the asset management firm and its U.S. subsidiary Global X took over an Australia-based ETF management firm, ETF Securities, to expand its global network. It was the first time for a domestic asset management firm to acquire an overseas ETF management company with its overseas earnings.