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Hantoo Asset Management, ACE US Big Tech 7+ 15% Premium Distribution ETF... "Net Assets Surpass 100 Billion Won"

Korea Investment Trust Management announced on the 3rd that the net asset value of the ACE US Big Tech 7+ 15% Premium Distribution (Synthetic) Exchange-Traded Fund (ETF) has surpassed 100 billion KRW.


The ACE US Big Tech 7+ 15% Premium Distribution (Synthetic) ETF is a covered call product that invests in major US big tech companies while targeting an annual distribution rate of 15%. Since its listing on the Korea Exchange on April 23, the ETF recorded a net asset value of 105.8 billion KRW as of June 2, about two months after its launch.


The increase in net asset value is attributed to net buying by individual investors. Individual investors have net purchased 73.3 billion KRW of the ACE US Big Tech 7+ 15% Premium Distribution (Synthetic) ETF since its listing. From May 20 to June 12 this year, there was a continuous net buying trend for 17 consecutive trading days.


The net buying trend centered on individual investors is understood to be due to the product’s characteristic of pursuing a high distribution rate. The ACE US Big Tech 7+ 15% Premium Distribution (Synthetic) ETF aims to pay an annual distribution rate of 15% by utilizing zero-day-to-expiration (0DTE) out-of-the-money (OTM) 1% options. Among covered call ETFs listed domestically, the ACE US Big Tech 7+ 15% Premium Distribution (Synthetic) ETF and the ACE US Stock 15% Premium Distribution (Synthetic) ETF series are the first to use 0DTE options that expire within 24 hours.


Excellent performance is also a strength of this ETF. The ACE US Big Tech 7+ 15% Premium Distribution (Synthetic) ETF recorded a 10.92% return over the past month, the highest among 23 covered call ETFs listed domestically.


The foundation of this performance is attributed to a mismatch strategy. Korea Investment Trust Management utilizes a growth-potential underlying index (Bloomberg US Big Tech Top 7 Plus Premium Decrement 15% Distribution Index) and Nasdaq 100 0DTE options, which facilitate premium collection. This management strategy can generate additional profits if the performance of the big tech company-tracking underlying index exceeds that of the Nasdaq. It is also characterized by the ability to partially track market performance in addition to premiums by using OTM 1% options.


Nam Yong-su, Head of ETF Management at Korea Investment Trust Management, said, "All types of covered call ETFs, including our products, can incur losses if the decline in the underlying index exceeds the option premium, so it is important to select an underlying index with high growth potential. We will strive to consistently pursue excellent performance and an annual target distribution rate of 15% through a strategy that tracks the long-term upward-trending big tech index and utilizes 0DTE OTM 1% options."


He added, "The distribution payment date for the ACE US Big Tech 7+ 15% Premium Distribution (Synthetic) ETF and the ACE US Stock 15% Premium Distribution (Synthetic) ETF series is on the 15th of this month. To receive the distribution, investors must purchase the product before the payment date."


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