Korean Investors Have Flocked to U.S. Treasury ETFs
Retail investors in Korea prioritized short-term bond funds and dividend stocks amid rising U.S. interest rates.
Updated on Oct. 3, 2026 in Investing
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Korean retail investors ramped up net purchases of U.S. ultra-short-term Treasury bond and dividend ETFs throughout September 2026. This shift followed a period of increased market volatility and rising yields on long-term government debt.
Why it matters
Investors sought defensive assets as U.S. Treasury yields hit levels not seen since 2002. Yields have been pressured by expanded government debt, persistent oil prices, and growth revisions linked to artificial intelligence.
Net purchases of the iShares 0-3 Month Treasury Bond ETF (SGOV) totaled $290.46 million in September, while the Schwab U.S. Dividend Equity ETF (SCHD) drew $230.97 million. These inflows occurred as the Federal Reserve raised benchmark interest rates to 3.75-4.00%.
The players
Federal Reserve
The central bank of the United States regulates monetary policy and sets the benchmark interest rate.
The details
The iShares 0-3 Month Treasury Bond ETF, which focuses on maturities of three months or less, emerged as the most-purchased overseas stock for Korean retail traders. Meanwhile, the Schwab U.S. Dividend Equity ETF, which tracks the Dow Jones U.S. Dividend 100 Index, attracted significant capital as investors sought reliable dividend-paying U.S. companies.
Timeline
June 2002 was the last time 30-year Treasury yields reached current levels.
September 1-30, 2026, marked the period of tracked net purchases.
September 16, 2026, saw the Federal Reserve raise interest rates by 0.25 percentage points.
October 1, 2026, was when the 30-year Treasury yield surpassed 5.6%.
Market Dynamics
The increased appetite for U.S. Treasury instruments follows a broader shift in global capital as investors react to the Federal Reserve's September 16, 2026, benchmark interest rate hike. This trend highlights a fundamental move toward defensive, interest-bearing assets as structural debt expansion and macro volatility reshape traditional portfolio strategies.
Retail investors are shifting capital toward short-term government bonds to capitalize on higher yields that have not been available since the early 2000s. This transition prioritizes immediate income through dividends and bond interest over the higher volatility associated with aggressive equity growth.
The takeaway
Rising interest rates are fundamentally altering how retail investors construct their portfolios to secure steady yields. Investors should remain mindful that the current bond market environment is being heavily influenced by shifting macroeconomic indicators like oil prices and government debt levels.
Further reading
For more background on how global market trends influence retail strategy, visit our Investing section.
Source note: This article includes information reported by 조선일보.
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