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Kiwoom Asset Management launches Secured Overnight Financing Rate ETF tracking Solactive index


Solactive has announced its first engagement with Kiwoom Asset Management as they join forces to introduce a new ETF that tracks the Solactive SOFR Daily Total Return Index. The firm writes that the HEROES US Dollar SOFR Active (Synth) ETF, through its daily cumulative return strategy, presents investors with the opportunity to participate in attractive yields offered by the SOFR rate. 

With the launch of this ETF, Kiwoom aims to provide financial market participants with a flexible and efficient tool to earn interest in line with the SOFR rate, Solactive says. The newly launched HEROES US Dollar SOFR Active (Synth) ETF has been listed on 20 June 2023 on the Korea Stock Exchange, under the stock code 460270.KS. 

The SOFR (Secured Overnight Financing Rate) itself is a benchmark interest rate that is based on transactions in the US Treasury repurchase market. Solactive writes that it is considered a more reliable benchmark rate than the London Interbank Offered Rate (LIBOR) since it is based on observable transaction data rather than estimated borrowing rates. The SOFR rate is used for USD denominated derivatives and loans, and it is gradually replacing LIBOR as the benchmark interest rate. 

Timo Pfeiffer, CMO of Solactive, says: “Amidst the prevailing economic conditions, we are observing investors reducing risk, leading to a growing inclination towards cash allocations and therefore creating demand for investment tools that can provide favourable yields. This new ETF can be a powerful instrument for facilitating tactical asset allocation decisions and can also be seen simply as a safe-haven investment in a high interest rate environment. We are excited to collaborate with major player Kiwoom for the first time, helping them to expand their product line up, and seeing our SOFR index increasingly becoming a benchmark in the money market space.”

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