KB Asset Management's 'Weekly Covered Call ETF' Surpasses 50 Billion KRW in Net Assets

KB Asset Management announced on the 19th that the ‘KBSTAR 200 Weekly Covered Call Exchange-Traded Fund (ETF)’ surpassed 50 billion KRW in net assets just over a month after its launch.

Word has spread that investing 10 million KRW in this product can yield approximately 1 million KRW in distributions within one month, drawing significant attention from individual investors.

Since the product launch on the 5th of last month, individual net purchases have continued for 31 trading days except for one day (March 26). In particular, after the first distribution was paid on April 2, buying momentum increased, with an average daily individual net purchase of about 200,000 shares.

The ‘KBSTAR 200 Weekly Covered Call ETF’ is the first covered call ETF based on domestic stocks to use a ‘weekly covered call’ strategy, which sells short-term call options with maturities of less than one week.

Weekly options, which expire every week, have lower volatility compared to standard monthly options but offer higher premiums, allowing for greater returns compared to monthly covered call products with one-month maturities.

The tracking index is the ‘KOSPI 200 Weekly Covered Call ATM Index,’ jointly developed by KB Asset Management and the Korea Exchange. Since the index’s inception in 2019, the average monthly option premium has been around 3%. Notably, the monthly average option premium has never fallen below 1% since the index was created.

This product also offers tax advantages compared to other covered call ETFs based on overseas assets or investment assets such as time deposits, bonds, and equity-linked securities (ELS).

Dividends generated from the KOSPI 200 stocks invested in by the ETF (around 0.16% monthly) are taxable, but most of the distribution source?capital gains from stock trading and income from selling options, which are exchange-traded derivatives?are excluded from the tax base calculation.

Kim Chan-young, Head of the ETF Business Division at KB Asset Management, said, “The KBSTAR 200 Weekly Covered Call ETF is an attractive product for investors seeking stable monthly distributions and tax benefits. As we successfully paid the first distribution of 105 KRW per share (distribution rate of 1.01%) on April 2 as scheduled, we will continue to do our best to manage performance to ensure future distribution payments.”