"Thinking of a Second Salary?"…The Rise of Monthly Dividend ETFs

Monthly dividend ETFs are gaining significant popularity as investors seek additional cash flow beyond their regular salaries

Monthly dividend ETFs are gaining significant popularity as investors seek additional cash flow beyond their regular salaries. This surge in interest is driving explosive growth in related products. This article explores why monthly dividend ETFs are attracting attention and the latest trends in this investment sector.

Monthly dividend ETFs have recently seen a surge in popularity. With an increasing number of young investors looking for additional cash flow, these products, once considered the domain of older investors, are now in high demand.

According to the Korea Exchange, the net assets of income-focused ETFs in the domestic market reached 14.4 trillion won in the first half of this year, a 76% increase compared to the previous year. Among these, monthly dividend ETFs have been particularly popular, with their net assets growing tenfold over the past year and a half to exceed 11 trillion won. The hashtag '#MonthlyDividend' has also become a popular search term on the Koscom ETF Check platform.

Originally designed for middle-aged and older investors seeking stable cash flow for retirement, monthly dividend ETFs are now favored by those seeking financial freedom. In the U.S., seven out of the top ten long-term Treasury ETFs are monthly dividend products.

The ACE U.S. 30-Year Treasury Active Fund (H) by Korea Investment Trust Management surpassed 1 trillion won in net assets at the end of March and has since grown by 50% to 1.48 trillion won as of August 16. Similarly, Mirae Asset’s 'TIGER U.S. 30-Year Treasury Premium Active Fund (H)', which started monthly dividends in April, has accumulated 713.1 billion won in net assets.

Asset management companies are responding to the growing demand by converting existing ETFs to monthly dividend models and launching new products. Korea Investment Trust Management has transitioned the dividend payment policies of its 'ACE U.S. Dow Jones REITs (Synthetic H)' and 'ACE Singapore REITs ETF' to monthly dividends starting this month. Samsung Asset Management has also switched its 'KODEX Banks' from annual to monthly dividends, increasing its monthly dividend ETFs to 14.

Kiwoom Asset Management has updated four of its ETFs, including 'KOSEF High Dividend', 'KOSEF U.S. Defensive Dividend Growth NASDAQ', 'Heroes REITs EGIS Active', and 'Heroes Government Bond 30-Year Active', to monthly dividends.

New products are also emerging. Of the 73 ETFs listed in the first half of this year, 28.8% (21 products) are monthly dividend ETFs. Samsung Asset Management launched the 'KODEX U.S. Dividend Dow Jones ETF' on August 13, the only ETF in Korea that pays dividends in mid-month. This allows for a 'bi-monthly dividend system' when used alongside other ETFs that pay at the end of the month.

KB Asset Management introduced the 'RISE U.S. 30-Year Treasury Active ETF' in May, which invests in U.S. 'AA+' rated long-term Treasuries and provides monthly interest payments.

A representative from an asset management company stated, "As the aging population grows and more young investors seek new cash flow streams, monthly dividend products are gaining popularity. The benefits of reinvesting dividends through retirement accounts have also contributed to this trend."

Monthly dividend ETFs are increasingly attracting a diverse range of investors seeking stable additional income. With asset management companies adapting to this trend and launching new products, the market for monthly dividend ETFs is expected to continue expanding. For investors looking for reliable returns, monthly dividend ETFs offer a promising opportunity.