KB Asset Management's RISE TDF ETF trio surpasses W400b in net assets

KB Asset Management announced Thursday that the combined net assets of its three RISE TDF ETF products — which merge the asset-allocation function of target-date funds (TDF) with the trading convenience of exchange-traded funds (ETF) — have exceeded 400 billion won ($285 million).

The company launched the RISE TDF2030, TDF2040 and TDF2050 Active Qualified ETFs in succession in 2022, building out a TDF ETF lineup that allocates investor assets in line with their expected retirement date. All three products carry a low annual total expense ratio of 0.01 percent and invest across domestic and overseas equity, bond and alternative-asset ETFs.

A TDF is an asset-allocation product that automatically adjusts the weighting between risk assets such as equities and safer assets such as bonds based on an investor's projected retirement date. The products employ a "glide path" strategy — tilting more heavily toward risk assets when retirement is far off to pursue higher returns, then gradually shifting toward safer assets as the target date approaches.

The RISE TDF ETF series implements this TDF asset-allocation strategy in ETF form. Risk-asset weightings range from 55 to 78 percent, and investors can choose among the RISE TDF2030, TDF2040 and TDF2050 Active Qualified ETFs depending on their retirement target date.

Investors with a longer time horizon before retirement, or those who prefer a more aggressive approach, can opt for the RISE TDF2050 Active Qualified, which carries the highest weighting in risk assets.

A key feature of the RISE TDF ETF series is that, unlike conventional publicly offered TDFs, it allows real-time intraday trading by leveraging the characteristics of ETFs. While public funds execute purchases and redemptions at a daily benchmark price, TDF ETFs can be bought and sold on an exchange at any price during trading hours, just like stocks. Settlement follows the same T+2 schedule as the domestic equity market.

Performance has also been strong. According to fund-rating firm FnGuide, the RISE TDF2050 Active Qualified posted one-year and three-year returns of 25.36 percent and 67.92 percent, respectively, as of Wednesday.

The products are also well suited for pension accounts. The RISE TDF ETF series can be held at up to 100 percent of the portfolio in defined-contribution retirement pension and individual retirement pension (IRP) accounts, allowing investors to apply a retirement-date-aligned asset-allocation strategy through a single product.

"The RISE TDF ETF combines the advantages of ETFs — low fees and real-time trading — with the automatic asset-allocation function of TDFs," said Yuk Dong-hwi, head of KB Asset Management's ETF product marketing division. "Because the asset allocation adjusts automatically in line with the investor's retirement date, there is no need to manually rebalance between equities and bonds based on market conditions, making pension investing considerably simpler."

KB Asset Management's ETF lineup has seen rapid net-asset growth recently. The combined net assets of RISE US S&P500 and RISE US NASDAQ100 — two ETFs tracking major US indexes — have also surpassed 3 trillion won. Both ETFs are listed on the domestic stock exchange, making them accessible through pension accounts and tradeable in Korean won without the need to open an overseas brokerage account or exchange currency. Their total expense ratios stand at 0.0047 percent per year for RISE US S&P500 and 0.0062 percent per year for RISE US NASDAQ100, the lowest among same-index-tracking ETFs listed on the domestic market.