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The Myth of U.S. Treasury as a Safe Haven is Crumbling as KGI A-Grade Corporate Bond 00950B Thrives

The Myth of U.S. Treasury as a Safe Haven is Crumbling as KGI A-Grade Corporate Bond 00950B Thrives

U.S. President Donald Trump's recent remarks have again captured market attention, as he has paused tariffs for China but is considering re-establishing tariffs on countries where no agreements have been reached. This has created anxiety among investors, leading to heavy selling pressure in the stock market. Meanwhile, U.S. Treasuries are facing a wave of liquidation, with foreign investment holding dropping to just 30%, the lowest since the financial crisis.

Amidst this uncertain market, investors are turning to bonds as a safe haven, with recent data showing five bond ETFs in the Taiwan stock market continually rising, including Yuanta U.S. Treasury 1-3 (00719B-TW), KGI A-Grade Corporate Bond (00950B-TW), Cathay Investment-Grade Corporate Bond (00725B-TW), Yuanta U.S. Treasury 7-10 (00697B-TW), and CTBC U.S. Government Bond 0-1 (00864B-TW).

KGI’s 00950B stands out as an average A-rated corporate bond, providing lower risk. The American Federal Reserve is also anticipated to lower interest rates, enhancing corporate debt repayment capabilities, thus reducing default risks. Nevertheless, the latest dividend announcement disappointed many investors, as the payout decreased from a previous high of 0.082 to only 0.076. Despite this, the bond maintains a stable yield between 0.07 and 0.08, with an annualized return of 6%.

For investors seeking consistent returns, 00950B outperforms high-dividend products. In comparison, Yuanta's 00940 and Uni-President's 00939 monthly payout ETFs have suffered serious losses, offering dividends of only 0.03 and 0.05 respectively, significantly lower than 00950B. The ex-dividend date for 00950B is May 5th, with the last purchase date being May 2nd, and investors can expect to receive returns by May 28th.

Investors should be aware of the risks associated with bond funds, including interest rate risks, insufficient liquidity in the bond market, and risks related to investing in unsecured corporate bonds.