Samsung Asset Management, KODEX US 30-Year Treasury +12% Premium ETF... "Surpasses 100 Billion KRW"

Samsung Asset Management announced on the 26th that the KODEX US 30-Year Treasury +12% Premium (Synthetic H) ETF surpassed 100 billion KRW in net assets just over two months after its listing. As of the closing price on the 25th, net assets reached 109.5 billion KRW, with cumulative net purchases by individual investors totaling 56.3 billion KRW.

The KODEX US 30-Year Treasury +12% Premium invests in US 30-year Treasury bonds with maturities of over 20 years while simultaneously securing an annual premium of around 12% by selling call options at a certain level every week. The interest (coupon) received from the US Treasury investments is reinvested to increase the participation rate in profits. The total expense ratio is also among the lowest in covered call strategy products investing in US Treasuries, at 0.25% per year.

Last month, this product paid its first monthly distribution with a distribution rate of 1.02%, amounting to 104 KRW. Including the distribution rate, the return since listing has reached 6.39%. The June distribution can be received by those who purchase the ETF by the 26th.

With ongoing expectations for a US interest rate cut, and the timing of the rate cut being delayed beyond market forecasts, it is estimated that many investors are receiving about 1% monthly dividends by utilizing option premiums and increasing their holdings through reinvestment. When the market shows a sideways trend like now, investors appear to actively use covered call strategy products to enhance returns through reinvestment of option premiums compared to investing in general products.

The KODEX US 30-Year Treasury +12% Premium uses weekly options with short maturities, allowing it to secure a 12% target premium with relatively low capital, thereby increasing the investment proportion in US bonds and improving price participation rates. Accordingly, in addition to monthly distributions of around 1%, investors seeking stable cash flow as well as aggressive investors expecting bond investment returns from interest rate cuts can benefit from the maximized capital gains effect through long-term US Treasury investments when rates decline, making this product very popular.

Additionally, this product was launched with currency hedging to reduce concerns about foreign exchange losses that may occur due to the tendency of the dollar value to decline alongside US interest rate cuts, enabling investors to fully realize capital gains from US rate cuts.

Meanwhile, the KODEX US 30-Year Treasury +12% Premium can be invested 100% through DC/IRP and pension savings accounts, making it suitable as a pension ETF product that offers stable returns and tax benefits, and continuous inflows of funds are expected.

Seobo Kyung, a manager at Samsung Asset Management, said, “The KODEX US 30-Year Treasury +12% Premium (Synthetic H) ETF has attracted significant investment in a short period as investors directly experience the high monthly dividend rate and price participation rate we presented,” adding, “It will be helpful not only for long-term investors planning for retirement but also for aggressive investors looking to use interest rate cuts as an investment opportunity.”