Korean Version of QYLD 'TIGER US Nasdaq 100 Covered Call ETF'... Should You Aim for Dividend Income?

[Asia Economy Reporter Junho Hwang] As the United States raises its benchmark interest rate once again, increasing volatility in the stock market, monthly dividend ETFs are emerging as a stable investment option for investors seeking security amid the unstable environment of high interest rates, high inflation, and high exchange rates.

'TIGER US Nasdaq 100 Covered Call ETF (Synthetic)', launched by Mirae Asset Global Investments on the 22nd, is a representative monthly dividend product. This ETF is the 'Korean version of QYLD,' identical to the 'Global X NASDAQ 100 Covered Call ETF (QYLD)' listed on Nasdaq by Global X, Mirae Asset Global Investments' US ETF management subsidiary.

QYLD, listed in December 2013, has total net assets of $6.65 billion (approximately 9.25 trillion KRW) as of the closing price on the 16th, making it the largest among Global X ETFs.

Notably, its recently annualized 'Distribution Yield' stands at 13.41%, paying out a distribution rate exceeding 1% every month, gaining popularity as a lucrative dividend product among Korean investors trading US stocks. According to the Korea Securities Depository, the scale of QYLD purchased by domestic investors this year has reached $108.6 million.

Based on QYLD's performance, the TIGER US Nasdaq 100 Covered Call ETF (Synthetic) is designed to allow Korean investors to conveniently invest domestically. Like QYLD, it uses the 'CBOE Nasdaq-100 BuyWrite V2 Index' as its underlying index, calculated by combining the Nasdaq 100 index spot and at-the-money (ATM) call options on the Nasdaq 100. The call option selling premium is significantly influenced by the volatility of the underlying asset, and since the Nasdaq 100 index has higher volatility compared to other major indices, a higher option premium can be expected.

Additionally, unlike investing in QYLD, there is no need for currency exchange, and investment is possible through pension accounts. When investing via pension accounts, dividend income tax on monthly dividends is deferred until withdrawal, making it more advantageous for long-term investment. Especially, if income generated steadily through long-term investment is continuously accumulated, compound interest effects occur, enhancing the stability of returns.

A representative from Mirae Asset Global Investments stated, "Due to the ongoing interest rate hike issues, uncertainty in the stock market is expected to continue, which will likely increase option premiums. We expect the TIGER US Nasdaq 100 Covered Call ETF (Synthetic) to serve as an income investment solution that domestic investors can utilize even amid uncertain macroeconomic conditions."

Meanwhile, the covered call strategy involves buying the underlying asset while simultaneously selling call options on that asset. Using the covered call strategy, losses are buffered by the option selling premium when the underlying asset declines, while gains are capped at a certain level when the underlying asset rises.