Shinhan Asset Management "‘SOL US 30-Year Treasury Covered Call ETF’... Strong Performance Since Early Year"

Shinhan Asset Management announced on the 22nd that the ‘SOL US 30-Year Treasury Covered Call (Synthetic) Exchange-Traded Fund (ETF)’ has outperformed the US long-term bond performance since the beginning of the year. In particular, the high purchase ratio through pension accounts is rapidly establishing it as an essential product in pension investors' portfolios.

Recently, around the Federal Open Market Committee (FOMC) meeting, amid market concerns that the rate cut magnitude within the year may decrease and persistent interest rate volatility, the returns of US long-term bond ETFs have been mixed.

Since the beginning of the year, the ‘SOL US 30-Year Treasury Covered Call ETF’ recorded a return of -0.2%, whereas the performance of domestically listed US long-term bond ETFs during the same period ranged between -7% and -13%. Considering that the ‘SOL US 30-Year Treasury Covered Call ETF’ could partially offset losses through monthly dividend payments, the difference can be considered even greater. In fact, since its listing at the end of last year, the ‘SOL US 30-Year Treasury Covered Call ETF’ has been paying an average monthly dividend of over 1% (1.01% in January, 1.02% in February) to date.

The ‘SOL US 30-Year Treasury Covered Call ETF’ is a product that invests in US long-term bonds using a covered call strategy, allowing investors to expect stable monthly dividend income. The ‘covered call strategy’ involves buying the underlying asset while simultaneously selling call options on that asset. This strategy buffers losses by the option premium when the underlying asset declines, while limiting returns to a certain level when the underlying asset rises.

Kim Jeong-hyun, Head of the ETF Business Division at Shinhan Asset Management, said, “The SOL US 30-Year Treasury Covered Call ETF is a monthly dividend-specialized product that can expect a monthly distribution rate of over 1% and an annual distribution rate of about 12%, based on the dividends paid so far. As a monthly dividend ETF boasting a relatively attractive dividend yield, it is suitable for monthly dividend investors who want to generate stable cash flow every month. Especially, since it is classified as a safe asset that can be invested up to 100% of the accumulated funds in tax-advantaged retirement pension accounts (DC/IRP), I believe it is a product that can create the greatest synergy with pension accounts,” he said.