[공모펀드 활성화] Expiring ETF release… Alternative investment redemption is also allowed

Input 2021.01.31 12:00

Government allows bond-type ETF maturity
Reduction of hybrid ETF investment stocks

The government has come up with a plan to diversify ETF products in order to strengthen the competitiveness of public offering funds. The government intends to allow ETFs with maturity and to ease the requirements for hybrid ETF indexes.

On the 31st, the Financial Services Commission announced that it would allow the launch of ETFs with an expiration date (expiration) for bond-type ETFs in the’Method to Enhance Public Offering Fund Competitiveness’ jointly announced with the Korea Exchange, the Financial Supervisory Service and the Financial Investment Association.

As domestic ETFs prohibit the establishment of an expiration date as a requirement for listing, there are currently no ETFs with maturity, whether in stock or bond types. For this reason, it was pointed out that there is a limit to absorbing investors who want to hold ETFs only until expiration. In the US, ETFs with maturity are already allowed. As of August last year, there were 65 bond-type ETFs set to maturity, with a set size of 19 billion dollars (about 21.25 trillion won).

The requirements for the mixed ETF index will also ease. Currently, the requirements for the composition of the underlying index of securities ETFs are divided into’bonds’ and’securities other than bonds’. A hybrid ETF can be created only when 10 bonds and 10 non-bond securities such as stocks are combined and 20 stocks are included in the fund. On the other hand, equity-type ETFs and bond-type ETFs can form an ETF by investing only 10 stocks each.

“Because of this problem, there is a request from the industry that it is more difficult to make hybrid ETFs than bond-type and stock-type ETFs,” said Ko Sang-beom, head of the Financial Services Commission’s Capital Markets Division, so that even hybrid ETFs can form an ETF by investing in only 10 stocks.

A plan to introduce a new type of fund was also discussed. Alternative investment funds such as real estate and infrastructure are currently banned from redemption. However, in the future, it plans to allow a’periodic refund fund (tentative name)’ that provides investors with a redemption opportunity at a certain percentage limit of the fund’s assets at a certain period.

The Financial Services Commission said, “The demand for alternative investment funds is high, but it is difficult to meet the exchangeability desired by ordinary investors as a closed fund with limited redemption, and it was difficult to quickly invest in good things due to long recruitment of investors.”

In addition, the Financial Services Commission plans to review a plan that allows the public offering fund to change its investment target asset and fund type. Initially, the fund is managed as a bond type, and after the fund scales up, it is converted to a social overhead capital (SOC) fund.