KB Asset Management Launches 'Fixed Call Write Ratio Covered Call ETF' for the First Time

KB Asset Management will launch the ‘RISE US Dividend 100 Daily Fixed Covered Call ETF’ on the 24th. This exchange-traded fund (ETF) is the first domestic equity covered call ETF to fix the call writing ratio.

A covered call is an options investment strategy that involves selling call options simultaneously with purchasing the underlying asset. Using covered calls cushions losses by the amount of the option premium when stock prices fall, while limiting returns to a certain level when stock prices rise.

The ‘RISE US Dividend 100 Daily Fixed Covered Call ETF’ applies a ‘fixed covered call strategy’ by maintaining a low proportion of option sales to participate in the long-term price appreciation of the underlying assets.

Instead of setting a fixed annual target distribution rate like existing covered call products, the call writing ratio is fixed at 10% of the underlying assets and sold daily, actively participating in about 90% of market gains while securing monthly distribution resources.

The ETF diversifies investments across the top 100 core U.S. listed dividend growth companies verified by 10 consecutive years of dividends, such as the Schwab US Dividend Equity (SCHD), a representative U.S. dividend growth ETF, while simultaneously selling 10% daily call options on the SPY ETF to pursue both capital gains and income.

Kim Chan-young, head of the ETF business division at KB Asset Management, said, "The RISE US Dividend 100 Daily Fixed Covered Call ETF is characterized by pursuing a ‘fixed covered call strategy,’ unlike existing products that require frequent changes in the call option writing ratio." He added, "Since it invests in representative U.S. dividend growth stocks with proven long-term growth and stability, we actively recommend it as a long-term installment pension investment product."

KB Asset Management will additionally launch two types of the ‘RISE Daily Fixed Covered Call Series’ in early October, investing respectively in ‘US Tech’ and ‘US AI Value Chain.’ These two products also fix the call writing ratio at 10%, tracking about 90% of the underlying index performance while pursuing monthly distributions.